[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
PROCESSING OF ATTORNEY FEES BY THE SOCIAL SECURITY ADMINISTRATION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON SOCIAL SECURITY
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
__________
JUNE 14, 2000
__________
Serial 106-70
__________
Printed for the use of the Committee on Ways and Means
U.S. GOVERNMENT PRINTING OFFICE
67-585 CC WASHINGTON : 2000
_______________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC
20402
COMMITTEE ON WAYS AND MEANS
BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Illinois CHARLES B. RANGEL, New York
BILL THOMAS, California FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York SANDER M. LEVIN, Michigan
WALLY HERGER, California BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana JIM McDERMOTT, Washington
DAVE CAMP, Michigan GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota JOHN LEWIS, Georgia
JIM NUSSLE, Iowa RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania KAREN L. THURMAN, Florida
WES WATKINS, Oklahoma LLOYD DOGGETT, Texas
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
A.L. Singleton, Chief of Staff
Janice Mays, Minority Chief Counsel
______
Subcommittee on Social Security
E. CLAY SHAW, Jr., Florida, Chairman
SAM JOHNSON, Texas ROBERT T. MATSUI, California
MAC COLLINS, Georgia SANDER M. LEVIN, Michigan
ROB PORTMAN, Ohio JOHN S. TANNER, Tennessee
J.D. HAYWORTH, Arizona LLOYD DOGGETT, Texas
JERRY WELLER, Illinois BENJAMIN L. CARDIN, Maryland
KENNY HULSHOF, Missouri
JIM McCRERY, Louisiana
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Ways and Means are also published
in electronic form. The printed hearing record remains the official
version. Because electronic submissions are used to prepare both
printed and electronic versions of the hearing record, the process of
converting between various electronic formats may introduce
unintentional errors or omissions. Such occurrences are inherent in the
current publication process and should diminish as the process is
further refined.
C O N T E N T S
__________
Page
Advisory of June 17, 2000, announcing the hearing................ 2
WITNESSES
Social Security Administration, William C. Taylor, Deputy
Associate Commissioner Office of Hearings and Appeals.......... 5
U.S. General Accounting Office, Barbara D. Bovbjerg, Associate
Director, Education, Workforce, and Security Income Issues,
Health, Education, and Human Services Division; accompanied by
Debra Sebastian, Assistant Director, and Valerie Melvin,
Assistant Director, Accounting and Information Division........ 28
______
Consortium for Citizens with Disabilities, Marty Ford............ 54
Lieberman, Lyle D., Lieberman & Gutierrez, P.A................... 50
National Organization of Social Security Claimants'
Representatives, Nancy G. Shor................................. 45
National Senior Citizens Law Center, Jenny Kaufmann.............. 56
SUBMISSIONS FOR THE RECORD
Advocates for the Disabled, Inc., Phoenix, AZ, Sue Shaafsma, and
Pat Campbell, letter........................................... 70
Ament, Wulf & Frokjer, S.C., Merrill, WI, William A. Wulf, letter 71
American Bar Association, Chicago, IL, Edward E. Kallgren, letter 72
American Disability Representation Specialists Association,
Hattiesburg, MS, Frank P. Edwards, letter...................... 72
Barrow, Roscoe L., II, David Allen & Associates, Sacramento, CA,
letter......................................................... 74
Brown, Kinsey & Funkhouser, P.L.C., Mason City, IA, Dolores J.
Bowers, letter................................................. 73
Campbell, Pat, Advocates for the Disabled, Inc., Phoenix, AZ,
letter......................................................... 70
Cebula, Ray, Disability Law Center, Inc., Boston, MA, letter..... 76
Comerford, Barbara B., Law Office of Barbara B. Comerford, P.A.,
Ridgewood, NJ, letter.......................................... 88
Cornaghie, Chris A., Esq., Memphis, TN, letter................... 73
David Allen & Associates, Sacramento, CA, Roscoe L. Barrow II,
letter......................................................... 74
Disability Law Center, Inc., Boston, MA, Ray Cebula, letter...... 76
Edwards, Frank P., American Disability Representation Specialists
Association, Hattiesburg, MS, letter........................... 72
Federal Bar Association, Kathleen McGraw, letter................. 77
Feldman, Thomas A., Esq., Denver, CO, letter..................... 80
Felps, Mary Ellen, Esq., Austin, TX, letter...................... 80
Flexer, A. Scott, Ward White & Associates, Holiday, FL, letter
and attachment................................................. 90
Friedman, Joel F., Jerome, Gibson, Stewart, Friedman, Stevenson &
Engle, P.C., Phoenix, AZ, statement and attachments............ 84
Ginger Lanigan and Associates, Inc., Brockton, MA, Ginger
Lanigan, letter................................................ 81
Heard, John R., Esq., San Antonio, TX, statement................. 81
Jennings, Joan, Esq., Sacramento, CA, letter..................... 84
Jerome, Gibson, Stewart, Friedman, Stevenson & Engle, P.C.,
Phoenix, AZ, Joel F. Friedman, statement and attachments....... 84
Kallgren, Edward E., American Bar Association, Chicago, IL,
letter......................................................... 72
Lanigan, Ginger, Ginger Lanigan and Associates, Inc., Brockton,
MA, letter..................................................... 81
Law Offices of Barbara B. Comerford, P.A., Ridgewood, NJ, Barbara
B. Comerford, letter........................................... 88
McGraw, Kathleen, Federal Bar Association, letter................ 77
Pekoe, Reed, Wright & Associates, Inc., Winter Park, FL, Ron
Pekoe, letter.................................................. 89
Schaafsma, Sue, Advocates for the Disabled, Inc., Phoenix, AZ,
letter......................................................... 70
Ward White & Associates, Holiday, FL, A. Scott Flexer, letter and
attachment..................................................... 90
White, Robert G., Esq., Chicago, IL, letter and attachments...... 92
Wulf, William A., Ament, Wulf & Frokjer, S.C., Merrill, WI,
letter......................................................... 71
PROCESSING OF ATTORNEY FEES BY THE SOCIAL SECURITY ADMINISTRATION
----------
WEDNESDAY, JUNE 14, 2000
House of Representatives,
Committee on Ways and Means,
Subcommittee on Social Security,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:10 p.m., in
room B-318, Rayburn House Office Building, Hon. E. Clay Shaw,
Jr. (Chairman of the Subcommittee) presiding.
[The advisory announcing the hearing follows:]
ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON SOCIAL SECURITY
FOR IMMEDIATE RELEASE
June 7, 2000
No. SS-18
Shaw Announces Hearing on
Processing of Attorney Fees
by the Social Security Administration
Congressman E. Clay Shaw, Jr., (R-FL), Chairman, Subcommittee on
Social Security of the Committee on Ways and Means, today announced
that the Subcommittee will hold a hearing on the processing of attorney
fees by the Social Security Administration (SSA). The hearing will take
place on Wednesday, June 14, 2000, in room B-318 Rayburn House Office
Building, beginning at 2:00 p.m.
In view of the limited time available to hear witnesses, oral
testimony at this hearing will be from invited witnesses only.
Witnesses will include representatives of the U.S. General Accounting
Office (GAO), SSA, and individuals affected by the procedures for
processing attorney fees. However, any individual or organization not
scheduled for an oral appearance may submit a written statement for
consideration by the Committee and for inclusion in the printed record
of the hearing.
BACKGROUND:
Individuals seeking Social Security benefits may choose to have
attorneys or other individuals represent them in their claims. The
Commissioner of Social Security through regulation establishes a limit
on the amount of the representation fee that may be charged and
approves each fee charged by any representative. In favorable
decisions, the Commissioner withholds the attorney's fee from the
claimant's past-due benefits and payment is made directly to the
attorney. Prior to 2000, the costs associated with the processing,
withholding, and approving direct payment of attorney fees were
absorbed in the administrative budget for the SSA.
The Ticket to Work and Work Incentives Improvement Act of 1999
(P.L. 106-170) requires the Commissioner to cover the costs of paying
attorney fees directly to attorneys out of the fees collected.
Attorneys are prohibited from recouping this cost from their clients.
Effective February 1, 2000, the assessment for calendar year 2000 is
6.3 percent of the approved attorney's fee. For future years, the
assessment will be set at a rate to achieve full recovery of the costs
of determining, processing, withholding, and distributing payment of
fees to attorneys, but it may not exceed 6.3 percent. The legislation
also eliminated a 15-day delay before attorney fees could be paid and
directed a study by the GAO of a number of issues related to
representation and payment of attorney fees with a report due by
December 2000.
Increasingly, many attorneys have expressed concerns about long
wait times for attorney fee payments. For many small practices, these
delays have caused serious financial setbacks, resulting in attorneys
giving up their practice representing Social Security applicants.
In announcing the hearing, Chairman Shaw stated: ``People wait a
lifetime to be able to claim Social Security benefits. They shouldn't
have to wait again to get the benefits they are entitled to. That the
Social Security application process is so complex people feel obliged
to hire an attorney to help them is in itself a serious problem. It is
especially troubling given the expected rapid growth in the number of
applicants and beneficiaries with the aging and eventual retirement of
the Baby Boomers. Much work remains in the area of simplifying the
application process, which will benefit applicants, the SSA, and
ultimately taxpayers. For now, though, a good start would be finding a
better way to pay claimants' representatives and to have SSA process
this workload as quickly and efficiently as possible.''
FOCUS OF THE HEARING:
The hearing will focus on the timeliness and accuracy of SSA's
processing of attorney fee payments, the impact of recent legislation
on this process, and recommendations for additional changes to improve
the process.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement
for the printed record of the hearing should submit six (6) single-
spaced copies of their statement, along with an IBM compatible 3.5-inch
diskette in WordPerfect or MS Word format, with their name, address,
and hearing date noted on a label, by the close of business, Wednesday,
June 28, 2000, to A.L. Singleton, Chief of Staff, Committee on Ways and
Means, U.S. House of Representatives, 1102 Longworth House Office
Building, Washington, D.C. 20515. If those filing written statements
wish to have their statements distributed to the press and interested
public at the hearing, they may deliver 200 additional copies for this
purpose to the Subcommittee on Social Security office, room B-316
Rayburn House Office Building, by close of business the day before the
hearing.
FORMATTING REQUIREMENTS:
Each statement presented for printing to the Committee by a
witness, any written statement or exhibit submitted for the printed
record or any written comments in response to a request for written
comments must conform to the guidelines listed below. Any statement or
exhibit not in compliance with these guidelines will not be printed,
but will be maintained in the Committee files for review and use by the
Committee.
1. All statements and any accompanying exhibits for printing must
be submitted on an IBM compatible 3.5-inch diskette in WordPerfect or
MS Word format, typed in single space and may not exceed a total of 10
pages including attachments. Witnesses are advised that the Committee
will rely on electronic submissions for printing the official hearing
record.
2. Copies of whole documents submitted as exhibit material will not
be accepted for printing. Instead, exhibit material should be
referenced and quoted or paraphrased. All exhibit material not meeting
these specifications will be maintained in the Committee files for
review and use by the Committee.
3. A witness appearing at a public hearing, or submitting a
statement for the record of a public hearing, or submitting written
comments in response to a published request for comments by the
Committee, must include on his statement or submission a list of all
clients, persons, or organizations on whose behalf the witness appears.
4. A supplemental sheet must accompany each statement listing the
name, company, address, telephone and fax numbers where the witness or
the designated representative may be reached. This supplemental sheet
will not be included in the printed record.
The above restrictions and limitations apply only to material being
submitted for printing. Statements and exhibits or supplementary
material submitted solely for distribution to the Members, the press,
and the public during the course of a public hearing may be submitted
in other forms.
Note: All Committee advisories and news releases are available on
the World Wide Web at ``http://waysandmeans.house.gov''.
4The Committee seeks to make its facilities accessible to persons
with disabilities. If you are in need of special accommodations, please
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four
business days notice is requested). Questions with regard to special
accommodation needs in general (including availability of Committee
materials in alternative formats) may be directed to the Committee as
noted above.
Chairman Shaw. I am sorry we are a few minutes late
starting the hearing this afternoon. Welcome to today's hearing
on processing of attorney fees by the Social Security
Administration.
Filing for Social Security benefits, especially disability
benefits, is so complicated that many people must hire
attorneys to help them through the process. The mind-boggling
complexity of the Social Security application process is itself
a serious problem that I think needs to be addressed, and
perhaps it will be addressed in future hearings. But today we
will focus on how attorneys are paid once an individual is
awarded benefits.
Attorneys may choose to receive their benefits directly
from the Social Security Administration. Under this option, SSA
deducts the fee from the claimant's past-due benefits and
forwards it to the attorney. Prior to this year, taxpayers
picked up the tab for SSA's costs of processing, withholding,
and forwarding this fee to the attorney.
The Ticket to Work and Work Incentives Improvement Act
changed that. Many people on both sides of the aisle thought
that having lawyers, not taxpayers, pay for Social Security's
processing of their paychecks was the right thing to do.
In addition to requiring that attorneys pay their own
processing costs, the law also required the General Accounting
Office to examine a number of related issues, including how
these costs should be assessed. Although the General Accounting
Office report is not due until the end of this year, today they
will share with us an interim progress report of their
findings.
Since the passage of the Ticket to Work legislation, I have
become increasingly concerned about the delay in SSA's
processing of attorney's fees. Attorneys should not have to
wait months or sometimes years to receive their payment from
the agency.
That is why ranking member Matsui and I, with the support
of several members of this subcommittee, introduced H.R. 4633
last week. This bill would allow SSA to impose the assessment
of attorney's fees only if the fee is processed and approved
for payment within 30 days of benefit approval.
Today, I look forward to the hearing of our witnesses'
views regarding this proposal, as well as other suggestions
that we may have for improving the attorney's fee process.
Mr. Matsui.
Mr. Matsui. Thank you, Mr. Chairman. I do not have anything
to add to what you put in. I will just submit my statement for
the record, but I have endorsed the legislation and I
appreciate the fact that we have done it together.
Chairman Shaw. We are doing too much, Bob.
Mr. Matsui. I know. We are the only ones, though.
[Laughter.]
[The opening statement follows:]
Opening Statement of Hon. Robert T. Matsui, a Representative in
Congress from the State of California
I want to thank Chairman Shaw for holding this hearing
today. I think it is very important that we examine the issue
of Social Security benefit claimant attorney fees as it has
been raised many times over the last year. In particular, we
have heard from numerous individuals and groups about this
topic since we passed the Ticket to Work and Work Incentives
Improvement Act of 1999 last fall.
The Ticket to Work and Work Incentives Improvement Act
imposed a new administrative assessment upon direct payments
from the Social Security Administration to attorneys. I think
it is our duty to review the Social Security Administration's
procedures for determining, withholding, and certifying such
payments and to examine possible improvements to those
procedures.
I am also very pleased that a number of Members of the
Committee on Ways and Means--Democrats and Republicans alike--
came together in a bipartisan fashion last week to introduce
legislation to make one improvement to SSA's procedures for
paying attorneys' fees. Our legislation is simple--it would
prohibit the Social Security Administration from charging an
attorney the new 6.3 percent administrative assessment unless
the agency certifies his or her fee for payment within 30 days
of the award of past-due benefits to his or her client.
Some maintain that the new 6.3 percent assessment is
necessary to cover the costs that SSA incurs in withholding and
processing fee payments for attorneys. If this is indeed the
case, and the 6.3 percent assessment is simply compensation for
services rendered, then it is reasonable to expect that SSA
will process fee payments to attorneys in a timely fashion. Our
legislation simply seeks to put that reasonable expectation
into law.
As we review SSA's procedures for making attorney fee
payments and as we consider ways to improve those procedures--
including the legislation I just described--I think we can all
agree that our first priority must be to ensure that benefit
claimants--whether they are filing a claim for Old-Age
Insurance, Disability Insurance, or Supplemental Security
Income--receive the benefits to which they are entitled.
Given the complexity of these programs, achieving this goal
requires that benefit claimants have access to skilled legal
professionals to help them with their claims. All too often,
claimants must rely on an attorney or another representative in
order to negotiate the claims process successfully. Therefore,
I think we can agree that simplification of the administration
of the OASDI and SSI programs and the maintenance of a pool of
qualified legal representatives must be one of our top
priorities.
Finally, we must be cognizant of the workloads that
programmatic or administrative changes may create for SSA. As
we all know from the hearings the Subcommittee held earlier
this year, SSA faces a number of long-term challenges in
preparation for the aging of the Baby Boomers. However, the
agency does not have the resources it requires to meet those
challenges. The Labor, Health and Human Services Appropriations
bill reported for FY 01 by the Appropriations Committee would
provide $156 million less for SSA's administrative budget than
the President's request. We cannot continue to ask the Social
Security Administration to do more with less each year.
I look forward to hearing from our witnesses this afternoon
and, in particular, to hearing their views on possible
improvements to SSA's attorney fee procedures.
Thank you, Mr. Chairman.
Chairman Shaw. Our first witness from the Social Security
Administration will be Dr. William C. Taylor, who is Deputy
Associate Commissioner for Hearings and Appeals.
Dr. Taylor, welcome to the hearing. We have your full
statement which will be made part of the record, and we invite
you to summarize as you see fit.
STATEMENT OF WILLIAM C. TAYLOR, DEPUTY ASSOCIATE COMMISSIONER,
OFFICE OF HEARINGS AND APPEALS, SOCIAL SECURITY ADMINISTRATION
Mr. Taylor. Thank you, Mr. Chairman. If I could begin with
a slight correction, I am not a doctor.
Chairman Shaw. Well, they've J.D. You are a doctor.
Mr. Taylor. Oh, thank you very much. [Laughter.]
Mr. Taylor. I have never had the courage to say that.
Chairman Shaw. And so are we.
Mr. Taylor. Mr. Chairman, Mr. Matsui, and members of the
subcommittee, good afternoon. I am William Taylor, Deputy
Associate Commissioner for SSA's Office of Hearings and
Appeals. I have been with the agency for almost 30 years and in
my present position since 1995.
Thank you for the opportunity to discuss the process by
which the Social Security Administration approves and pays
attorney fees. It is an important, multifaceted issue. Last
year about 57 percent of all cases at the ALJ hearing level
involved claimants with attorneys, and in 1999, SSA paid almost
200,000 fee payments totaling more than $450 million to
attorney representatives.
We are working to make this payment process as fair,
efficient, and timely as possible. My written statement details
the history of the attorney fee process, SSA's implementation
of the recent fee payment legislation, and planned payment
process improvements. I ask that my written statement be placed
in the record.
Last year, the Ticket to Work and Work Incentives
Improvement Act of 1999 eliminated the 15-day waiting period
for certification of an attorney fee. In addition, it allowed
SSA to charge an assessment, not to exceed 6.3 percent of the
direct payment amount to recover the costs for determining
withholding and certifying fees to attorneys.
In other words, the current 6.3 percent assessment is the
cost of providing the attorney with the service of calculating
withholding and paying the fee. SSA began charging the
assessment in cases in which the decision was made on and after
February 1, 2000.
SSA has not received any additional resources with which to
address this issue, hindering our ability to make significant
improvements to our current performance. While we did clear out
our attorney fee claim backlogs before the user fee became
effective, we had to redirect limited resources that could have
been used to provide better overall public service, for
example, on our 800 telephone number.
With the heightened awareness of the attorney fee process
generated by the enactment of the 6.3 percent assessment has
come an increase in the number of complaints from attorneys
about the fee process. We recognize the importance of timely
payment to attorneys who successfully represent their clients.
In fact, we have taken several measures to clear the backlog of
outstanding fee claims. Among these measures are providing 111
work years to technical staffs, diverting resources from other
workloads to process attorney fee claims, giving priority to
those outstanding fee claims to see if they can be paid
immediately.
These measures have worked. By March 21 of this year, SSA
had reviewed approximately 79,700, or about 93 percent, of the
85,991 claims that were outstanding as of February 2 of this
year. Based on these reviews, we immediately paid fully
developed claims. When additional development was needed, we
requested it on a priority basis.
Furthermore, as of May 15 of this year, SSA had paid 167,
or approximately 84 percent, of the 197 fee claims that were
brought to our attention by this subcommittee. We plan to
resolve the outstanding claims soon. Although we have resolved
many of these cases, we realize that there continue to be
concerns about delays in paying attorney fees. That is why the
commissioner has requested a review of the attorney fee process
that is currently underway.
The current fee payment process, whether fee agreement or
fee petition, requires manual action and considerable
coordination between hearing office functions and processing
center functions. Because this is a complex process involving
many steps, manual actions and even mailing time, the new
legislation would require that SSA forfeit the amount we assess
the attorney in two-thirds of the attorney fee cases. My
written statement describes this process in more detail.
The legislation enacted last year did not allow SSA to
deposit the fees raised as a result of the assessment in our
LAE account. In the absence of that provision, the 6.3 percent
assessment is directed back to the Title II trust funds. Thus,
any restriction on SSA's ability to impose the assessment will
result in a loss to the trust funds. For instance, in the case
of a 30-day time limit, our actuaries estimate that about two-
thirds of the payments would be lost.
In conclusion, Mr. Chairman, the Social Security
Administration needs more resources. Lack of adequate resources
affect our ability to timely process not only attorney fees but
all agency workloads. The Commissioner has presented SSA's FY
2001 budget to the House Appropriations Subcommittee on Labor,
Health and Human Services and Education.
That subcommittee has, however, recommended a reduction of
$156 million below the President's request. This reduction is
even greater when compared to the Commissioner's budget
request. The Commissioner is on record as saying that funding
at this level would seriously undermine stable staffing and
performance for the agency.
As to attorney fee processing, we are committed to
providing the best service possible to the attorneys who
represent our claimants, but we face serious challenges as we
work to improve our performance in this area. Without the
benefit of additional administrative funds, we must shift
existing resources to balance the needs of this workload to pay
attorneys with other workloads serving applicants and
beneficiaries.
Last year we estimated that we could pay attorneys
generally within 60 days the first year after enactment and 45
days the second year if adequate resources were provided. Until
our review of the attorney fee process is complete, we do not
know what our level of performance will be. As I have pointed
out, however, the 30-day time restriction imposed by the bill
could result in the loss to the Social Security trust funds in
excess of $80 million over five years.
We look forward to working with you and other members of
the subcommittee to find ways to meet our resource needs. I
will be happy to answer any questions that you may have. Thank
you, Mr. Chairman.
[The prepared statement follows:]
Statement of William C. Taylor, Deputy Associate Commisssioner, Office
of Hearings and Appeals, Social Security Administration
Mr. Chairman, Mr. Matsui, and Members of the Subcommittee:
Thank you for inviting me to discuss the process by which
attorneys may request that the Social Security Administration
(SSA) approves and pays attorney fees. We recognize the
importance of timely payment to attorneys who successfully
represent their clients. Representatives are entitled to world
class service, as are all of SSA's customers, and in 1999, SSA
made 200,000 fee payments to attorneys totaling almost more
$450 million. Today, I will discuss with you the history of the
attorney fee process, SSA's current process, implementation of
the new law, and some planned improvements in this area. In
addition, I will present SSA's views on H.R. 4633, which would
make further changes to the attorney fee process.
History of Attorney Representation and Fee Approval
The Social Security Act has recognized a role for attorneys
as claimants' representatives since 1939, with the enactment of
the Social Security Amendments of 1939. Pursuant to statutory
authority, the Social Security Board's Administrator
promulgated rules and regulations governing representatives of
claimants and set the maximum fee attorneys could charge.
At first, the maximum an attorney could charge was $10
unless a petition was filed and a higher amount was authorized.
In 1960, the amount an attorney could charge without approval
was increased to $20 for representation before the Bureau of
Federal Old-Age Benefits with amounts up to $50 for
representation before the Bureau and a hearing examiner and/or
the Appeals Council. Disability cash benefits had begun in 1956
and more and more appeals were on disability claims.
The Social Security Amendments of 1965 provided for
withholding up to 25 percent of past-due benefits for direct
payment to an attorney in court cases to ensure that claimants
had access to effective legal representation at a fair rate of
compensation. The Social Security Amendments of 1967 required
the Secretary to approve ``reasonable'' attorney fees, not to
exceed 25 percent of the past-due benefits, for services
rendered in administrative proceedings, and authorized the
Secretary to certify payment directly to an attorney from a
claimant's past-due benefits.
When the Ways and Means Committee designed the Supplemental
Security Income (SSI) program in 1972, it decided not to
authorize any similar withholding from a claimant's past-due
benefits. The Committee concluded that such a withholding would
be ``contrary to the purpose of the program.'' This conclusion
still makes sense. To paraphrase Justice Brennan in the Supreme
Court's decision in Bowen v. Galbreath in 1988, given the
extreme financial need of SSI beneficiaries, one can conclude
that withholding past-due benefits under the SSI program will
cause greater hardship than withholding past due benefits from
insured individuals under the Old-Age, Survivors and Disability
Insurance programs.
The Omnibus Budget Reconciliation Act of 1990 created the
fee agreement process to streamline payment of attorney fees by
permitting SSA to routinely approve fees that were within
certain limits (the lesser of $4,000 or 25 percent of past-due
benefits) if the representative and client both agreed in
writing to the fee. Payment of the fee could not be certified
pending a 15-day administrative review period after receipt of
the award notice. The 1990 legislation also continued the
exclusion of SSI claims from the direct payment of attorney
fees from a claimant's past-due benefits.
The Ticket to Work and Work Incentives Improvement Act of
1999 eliminated the 15-day waiting period for certification of
an attorney fee and allowed SSA to charge an assessment, not to
exceed 6.3 percent of the fee, to recover the costs for
determining and certifying fees to attorneys. In other words,
the current 6.3 percent assessment is the cost of providing the
attorney with the service of calculating, withholding, and
paying the fee. SSA began charging the assessment on cases on
which the decision was made on or after February 1, 2000.
Process in General
Section 206 of the Social Security Act provides that a
representative may not charge or collect, directly or
indirectly, a fee in any amount not approved by SSA or a
Federal court. SSA, under either the fee petition or fee
agreement process, approves the fee that may be charged to
represent a claimant for Social Security and SSI benefits in
administrative proceedings. At each level of the determination
process, applicants may be represented by an attorney or other
individual in pursuing their claim. Over the last 20 years, the
proportion of applicants with representation at the hearing
level has increased dramatically; and in fiscal year 1999,
about 57 percent of all cases decided at the Administrative Law
Judge (ALJ) hearing level involved attorneys.
Obtaining payment from clients is often difficult for
attorneys, who sometimes have to expend considerable resources
to get paid. In virtually all successful Social Security
claims, SSA ensures that the attorney receives payment. By
paying attorneys from withheld past-due benefits, SSA is
providing a valuable service to attorneys, guaranteeing payment
of all or a portion of any fees due. In SSI cases, the attorney
must look to the claimant for payment.
Representatives may request payment for services through
either a fee petition or a fee agreement process.
Fee Petition Process
After completing his or her services for the claimant, the
representative (attorney or non-attorney) must request the
Commissioner's approval of fees. Each fee petition requires an
individual evaluation by an ALJ or other authorized personnel
of the worth of the services. Adjudicators, in authorizing a
fee, consider factors such as the extent and nature of the
services performed, the complexity of the case, and the amount
of time the representative spent on the case. Fees over $5,000
require additional review.
After SSA authorizes a fee, we notify the claimant and
their representative of the authorized fee and their right to
administrative review. Because of the highly involved nature of
this process, fee petition claims are very rarely paid within
30 days.
While we do not routinely track data on the use of fee
agreements and fee petitions, we have just completed a special
systems run on a sample of attorney fee cases. That data show
that the percentage of fee payments that were withheld and paid
using the fee petition process has steadily declined from 1995
through 1999, from 30 percent in 1995 to just 13 percent in
1999. In addition, that decline appears to be continuing in
2000. From January 2000 through the end of May 2000, the
percentage of fee petitions fell to just under 12 percent.
What this tells us is that more attorneys are electing to
receive their fees through the fee agreement process, which I
will discuss next, even though fees received through that
process are capped at a specified amount. The decline in the
number of fee petition requests filed suggests that, contrary
to some reports, attorneys are not seeking to have their fees
paid through the fee petition process because they can get a
higher fee than what they could receive under the alternate
process. In fact, in addition to the decline in the number of
attorneys requesting payment through fee petition, 91 percent
of fee petition payments approved are for less than $4,000
(generally, the amount which a fee under an approved agreement
may not exceed).
Fee Agreement Process
The fee agreement process was developed to be a simpler
alternative to the fee petition process. Under the fee
agreement process, if the representative and claimant sign and
submit a written agreement as to the amount of the fee, SSA
will generally approve the agreement if the specified fee does
not exceed the lesser of 25 percent of the claimant's past-due
benefits or $4,000. SSA does not withhold past-due benefits for
non-attorney representatives or in SSI cases, but still must
approve the fee. The Commissioner then notifies the respective
parties of the maximum fee and right to request administrative
review. This is usually the quicker and more common method to
set the fee.
Based on the sample run just completed, the number of fee
agreement cases accounted for almost 87 percent of fee payments
processed in 1999. The sample for 1995 showed 70 percent were
fee agreement cases. The percentage for this year through the
end of May rose to 88 percent. Obviously, more and more
attorneys prefer to use the more streamlined process, which
suggests that attorneys are not concerned about the $4,000
limitation. The $4,000 limit was put in place based on a
recommendation that SSA adopt a rebuttable presumption that a
fee equaling 25 percent of the claimant's past-due benefits, up
to $4,000, is reasonable. In 1999, the average payment under
the fee agreement process was $2,555.
Implementation of the New Law
With the heightened awareness of the attorney fee process
generated by enactment of the 6.3 percent assessment has come
an increase in the number of complaints from attorneys about
the fee process. We recognize the importance of timely payment
to attorneys who successfully represent their clients. With
elimination of the 15-day waiting period, some cases are being
paid more quickly. Other cases, however, are only being helped
marginally.
To address this issue, we have taken several measures to
clear the backlog of outstanding fee claims. Among these
measures are providing 111 work years to technical staffs,
diverting resources from other work loads to process the
attorney fee claims, and giving priority to these outstanding
fee claims to see if they can be paid immediately.
These measures have worked. By March 21, 2000, SSA had
reviewed approximately 79,700 (or 93 percent) of the 85,991
claims that were outstanding as of February 2, 2000. Based on
these reviews, we immediately paid fully developed claims. When
additional development was needed, we requested it on a
priority basis.
Furthermore, as of May 15, 2000, SSA had paid 167 (or
approximately 84 percent) of the 197 fee claims that were
brought to our attention by this subcommittee. We plan to
resolve the outstanding claims soon. Although we have resolved
many of these cases, we realize that there continue to be
concerns about delays in paying attorney fees.
The legislation introducing the attorney assessments is
being implemented in phases, beginning with an all manual
process, with plans to automate steps of the process as time
and resources were to permit. This is not unlike implementation
of many SSA legislative initiatives. The process of paying the
attorney in Title II cases is not completely manual, although
it does require a manual review and input to begin the Treasury
payment process.
SSA's systems are set up to contain information on the
primary numberholder and any auxiliary beneficiaries only.
Information about third party payments, such as attorney fee
payments, is not captured on SSA's Master Beneficiary Record
(MBR) system.
If the Agency decides to automate attorney payments, the
effort would be extremely significant, involving major redesign
of the Title II data structures and client files. One
requirement for paying non-beneficiaries would be to develop
and record some discrete identifier for each payment and payee
to maintain a good audit trail. This might be the attorney's
SSN or a firm's Tax ID number or Employer ID number. Up to now,
the attorneys and their advocacy groups have been adamant that
they not be required to supply this or similar identifying
information to SSA.
Proposal to Change the Attorney Fee Process
H.R.4633, recently introduced by you and other members of
the Subcommittee, would not allow SSA to impose the attorney
fee assessment if payment is not made to the attorney within 30
days after the initial certification of payments to the
beneficiary.
The current fee determination process, whether fee
agreement or fee petition, requires manual actions and
considerable coordination between hearing office functions and
processing center functions. Because this is a complex process,
as I will describe, involving many steps, manual actions, and
even mailing time, the new legislation would require that SSA
forfeit the amount we assess the attorney in two-thirds of the
attorney fee cases.
While some fee agreement cases may require only limited
development, and SSA may even pay the attorney and the claimant
at the same time, that is not always the case. Many fee
agreement cases require additional development (for instance,
if a workers' compensation computation is needed to calculate
the proper amount of past-due benefits or if we need to develop
applications for the children or spouse of the claimant), and
the claimant is awarded ongoing benefits pending determination
of past-due benefits. In those cases the attorney is not paid
until past-due benefits are awarded.
In fee petition cases, direct payment to the attorney must
await both the calculation of the past-due benefits and
authorization of the fee. Once past-due benefits have been
calculated and the fee has been approved, direct payment is
made to the attorney.
Fee authorizations for larger amounts can also take longer
to process because they often occur in difficult, complicated
cases involving a lengthy appeals process. This results in SSA
having to consider a long, detailed record of all the services
that were performed in order to determine a ``reasonable fee.''
In addition, fee authorizations for more than $5,000 involve an
additional step, i.e., our policy requires a review and an
approval by the Attorney Fee Officer in the Office of Hearings
and Appeals, a Regional Chief ALJ, or the Deputy Chief
Administrative ALJ.
As you know, SSA does not have a tracking system in place
from the start to the finish of the process to measure the time
it takes us to pay attorney fees; however, attorney fees in fee
agreement cases have generally been paid within 90 days of the
award notice. As a result of changes that we have already made,
including the elimination of the 15-day pre-payment holding
period for fee agreement cases, payment of attorney fees can
now generally be made within 60 days of the award notice.
As I mentioned, H.R.4633 would not allow SSA to impose the
attorney fee assessment if payment is not made to the attorney
within 30 days after the initial certification of payments to
the beneficiary. There are cases in which we are not able to
pay the attorney until completion of the additional development
I have described. Any time limitation that would restrict SSA
from imposing the user fee assessment should exclude both fee
petition cases and fee agreement cases for which there is
outstanding development.
While we agree that, in general, attorneys should receive
their fees timely, there are cases in which the extra time
needed to process the attorney fee payment is not within SSA's
control. These cases include not only fee agreement cases with
outstanding development, but virtually all fee petition cases,
since the attorney is not required to file a request for
payment until 60 days from the date of the decision, and may
even request an extension beyond the 60 days. In addition, some
cases take significantly longer to pay because of the need to
develop additional evidence, such as proof of workers'
compensation payments.
The estimated $123 million in proceeds from the 6.3 percent
assessment over the first 5 years would be directed to the
title II trust funds. Thus, any restriction on SSA's ability to
impose the assessment would result in a loss to the trust
funds. For instance, in the case of a 30-day time limit, the
Actuaries estimate that about two-thirds of the payments would
be lost.
Extending Attorney Fee Withholding to the SSI Program
SSI is a means-tested program providing cash assistance to
aged, blind, and disabled individuals whose incomes and
resources are below minimal levels set by law. Currently,
individuals with countable income above $512 a month and
countable resources above $2,000 are not eligible for SSI. As
you can see, SSI beneficiaries are among the most vulnerable
Americans in that they have little in the way of other income
or personal savings.
Arguably, SSI applicants are even worse off in that they
often have very small amounts of monthly income and are even
poorer than SSI beneficiaries. Any income or resources that
they do have is needed for food, clothing and shelter. It is
likely that they may go into debt while they are waiting for
their SSI applications to be processed.
When they finally receive their SSI benefits, those
benefits often are used to pay bills or repay loans that they
incurred during the months that their SSI applications were
pending. We are concerned that withholding 25 percent of
accumulated benefits might take away funds needed for basic
needs. It would also eliminate the option that SSI
beneficiaries and their attorneys could work out agreements to
pay the fee out over time.
In addition, there are other implications with regard to
direct withholding from SSI payments apart from the financial
impact on SSI beneficiaries. There are also serious workload
implications for SSA regarding extending the service we offer
attorneys representing Social Security claimants to SSI
claimants. For instance, it would require major systems changes
to existing SSA programs, and would require our field office
employees to take direct actions to pay the attorney fees,
which they do not currently do, as well as responding to
requests for information regarding payments to SSI attorneys
and explaining notices. At this time, we do not have an
estimate for the number of workyears we will need to implement
direct withholding of attorney fees in SSI cases.
Review Process
Our procedures to pay attorneys, particularly in fee
petition cases involving large amounts, are admittedly complex.
That is why the Commissioner has requested a review of the
attorney fee process that is currently underway.
Part of the Commissioner's review will be to study ways in
which we can better measure our performance in attorney fee
processing. This review will allow us to identify those areas
in which we may be able to improve that performance. You can be
assured that we will share the results of that review. It is
expected to be completed by the end of this year.
Until our review is completed, however, I urge you not to
make changes in the current process. We need time to evaluate
the current assessment process, which has been in place for a
very short time. Until we have the results of our review, we
would view any further changes to the program with extreme
hesitation.
Our review of the process will cover a number of issues,
including:
Gathering more current data on the attorney fee
process, including a comparison of fee processing before and
after the elimination of the 15-day waiting period and the
imposition of the 6.3 percent assessment;
Ascertaining how best to assemble and maintain
management information about the fee authorization and payment
process;
Reevaluating the need to increase the $4,000 cap;
Reevaluating our rules for approving fees,
especially additional review for larger fees; and
Studying how best to coordinate fees among
multiple representatives and within law firms.
We hope to use the results of this review to significantly
improve the process. I will keep you informed of our progress.
I would also point out that the legislation allows SSA to lower
the 6.3 percent assessment if the cost of administering the
attorney fee process is less than the revenue raised by the
assessment. As part of our overall review, we are beginning a
study to see whether our original estimates of the costs of
providing the attorney fee payment process and the 6.3 percent
assessment are still roughly equal. If they are not, we will
lower the assessment.
Prompt Payment Act
You asked me to comment on the applicability of the Prompt
Payment Act to the attorney fee process. The Prompt Payment
Act, enacted in 1982 and amended in 1988, ensures that
companies providing goods or services to the government are
paid in a timely manner. Under Section 3901 of title 31 of the
U.S. Code, a business can collect an interest penalty on late
payments from the government. According to regulations, the
Prompt Payment Act applies in the areas of procurement
contracts, vendor payments, utility payments, and Commodity
Credit Corporation payments.
According to the plain language of the statute and its
regulations, SSA's direct payment of attorney fees on behalf of
Social Security claimants is not subject to the Prompt Payment
Act. Through the direct payment system, SSA merely serves as an
intermediary to facilitate and ensure payment of attorney fees
owed by the client, the Social Security claimant. In fact, SSA
does not use its own funds to make direct payment of attorney
fees, but simply issues the payment on the claimant's behalf
through the Treasury Department. Consequently, Section 3901
does not apply to SSA's unique relationship with claimants'
attorneys, and SSA is not required by that law to add interest
to the attorney fees it directly pays.
Conclusion
In conclusion, Mr. Chairman, the Social Security
Administration needs sufficient resources in order to process
its work effectively. Lack of adequate resources affects our
ability to timely process not only attorney fees but all Agency
workloads. The Commissioner has presented SSA's FY 2001 budget
to the House Appropriations Subcommittee on Labor, Health and
Human Services and Education. That subcommittee has, however,
recommended a reduction of $156 million below the President's
request. This reduction is even greater when compared to the
Commissioner's budget request. The Commissioner is on record
saying that funding at this level would seriously undermine
stable staffing and performance for the agency.
As to attorney fee processing, we are committed to
providing the best service possible to the attorneys who
represent our claimants, but we face serious challenges as we
work to improve our performance in this area.
Until our review of the attorney fee process is complete,
we do not know what our level of performance will be. As I have
pointed out, however, the 30-day time restriction imposed by
the bill could result in a loss to the Social Security trust
funds in excess of $80 million over five years.
We look forward to working with you and the other members
of the Subcommittee to find ways to meet our resource needs. I
will be happy to answer any questions you may have.
Chairman Shaw. Mr. Collins.
Mr. Collins. Thank you, Mr. Taylor. Just kind of walk me
through the fee process itself, please.
Mr. Taylor. Certainly. Our fee process consists of two
basic ways that attorneys can have fee arrangements with their
clients. The first, and the one that has been in existence for
the longest, is the fee petition process whereby the attorney
typically has a contingency arrangement with the client and
submits after the successful conclusion of the claim the
attorney submits a petition detailing the services that were
provided to that claimant, and that petition is then subject to
review through a review process. Usually in our case, it is by
the administrative law judge who held the hearing.
The other basic process is the fee agreement process which
was begun in 1991 and that is a more streamlined process
whereby the claimant and the attorney agree up front prior to
the decision that the attorney will accept either 25 percent of
the past due benefit payment or $4,000, whichever is less, so
effectively there is a $4,000 maximum.
If that agreement is approved, and they almost always are,
by the administrative law judge that completes the first stage
of the fee authorization payment process. After that, the fee
agreement along with the favorable decision is sent to a
processing center. We have six processing centers plus another
processing center located near the Social Security
Administration headquarters in Baltimore. It is their job to
then determine the amount of past due benefits that are payable
to the claimant. In a direct payment case under title II they
will make a rough determination of the past due benefit amounts
and will issue an award notice to the claimant, put the
claimant in continuing benefit status, and pay a past due
benefit amount. At the same time they will withhold 25 percent
of that past due benefit for eventual payment to the attorney
subject to final approval of the fee.
In the fee petition process and in the fee agreement
process, the final amount is subject to some adjustments
depending upon such things as the receipt of workers'
compensation benefits by the claimant. That information has to
be obtained, if it has not already been obtained, and
considered in calculation of the actual past due benefit amount
and adjustments are made, and when that process has been
completed, the final determination of the 25 percent can be
made and the direct payment can be made to the attorney of the
attorney's fee.
Mr. Collins. You may have stated it. What percent goes with
first the fee petition and what percentage of claimants go with
the fee agreement? Do you have any idea?
Mr. Taylor. Yes, congressman, I do.
Mr. Collins. And is there a cap on the fee petition?
Mr. Taylor. To answer the second question first, there is
no cap on the fee petition process. SSA will only withhold 25
percent of past-due benefits, but there is no cap on the actual
amount of the fee that can be authorized. Anything over the 25
percent must be collected directly by the attorney.
In terms of the use of the fee agreement versus the fee
petition process, currently it is running about 88 percent of
the fee payments are made pursuant to the fee agreement process
and about 13 or 12 percent under the fee petition process. That
is a substantial change from the situation that existed several
years ago. The usage of the fee agreement process has been
increasing in recent years and continues to increase and that,
I think, was the intention of the legislation that the process
would be streamlined and that most, if not all, of the fee
payments would be made pursuant to this simplified process.
Mr. Collins. Okay. Well, I see my time is about out, but I
appreciate that very much. Thank you. I may have another
question.
Chairman Shaw. Mr. Matsui.
Mr. Matsui. Thank you, Mr. Chairman. Mr. Taylor, you get
the claimant's check out once the case is resolved within how
many days on the average?
Mr. Taylor. I do not know that I have that information
readily available.
Mr. Matsui. But it is less than 30 days?
Mr. Taylor. Well, I am not sure that it--
Mr. Matsui. It is not?
Mr. Taylor. I am not sure that it is less than 30 days.
Mr. Matsui. Really. So in other words, if somebody has a
$5,000 claim that is adjudicated and it is awarded, the
disabled individual then may have to wait more than 30 days,
and I know you do not have the exact number, but I am trying
to--
Mr. Taylor. I can certainly get the information for you. If
you are going from the date of the decision, the favorable
decision, which must then be transmitted to the processing
center where the past due benefits are calculated, I cannot say
for sure that it is always within 30 days, but I would be happy
to obtain the average time. I am sure that we maintain that.
[The information follows:]
We estimate that the average processing time for hearing-
level cases from the date of the decision to payment
effectuation/award notice to the claimant is about 30 days.
Mr. Matsui. Does the check to the claimant usually go out
at the same time the check to his or her attorney goes out or
is it two separate actions?
Mr. Taylor. It may go out at the same time, but in those
cases in which there is a need to develop additional
information, such as cases regarding workers' compensation or
auxiliary beneficiaries who may be entitled, before that final
past due benefit amount can be exactly calculated. In cases
such as these the payment to the attorney would be made later
than the payment to the claimant.
Mr. Matsui. In normal cases, later, because you have to
calculate how much you are going to take off the top to the
claimant; is that right? And then after that--
Mr. Taylor. Well, to make the exact calculation in cases
where the processing center has to do additional development to
determine the past due benefits, they would make the payment to
the claimant when they make the initial payment, but they would
not release the payment to the attorney until they had made a
final calculation of past-due benefits after development. And
then there may be adjustments made to the claimant's payments
as well at that time.
Mr. Matsui. So you really cannot do all the checks at the
same time, it sounds like, because you have too many
calculations?
Mr. Taylor. I believe there are instances in which we can
do it at the same time, but we could not--
Mr. Matsui. When there are no other claims on the--
Mr. Taylor. That is right. We cannot do that all of the
time under our current process.
Mr. Matsui. It is hard to argue that the attorney should be
paid sooner than the claimant, although I guess you could see a
few cases where that could happen given the 30 day requirement
but no requirement with respect to the claimant. But let me ask
you this. The check to the claimant has to be--that is a very
high priority, I would imagine, right, in the department?
Mr. Taylor. Absolutely.
Mr. Matsui. Now, how high of a priority is it to pay the
attorneys? I mean, you know, again, I know you cannot calculate
it on a scale one to 1,000 or something like that.
Mr. Taylor. Certainly.
Mr. Matsui. But there must be some evaluation that goes
into how you allocate your budget?
Mr. Taylor. We do, of course, consider these to be matters
of priority, but as you have suggested, we have a number of
competing priorities.
Mr. Matsui. Right.
Mr. Taylor. And these attorney fee payment processes, as
much as we want to make them as quickly as we can, have to be
handled with competing workloads such as the payments to
claimants. I think--
Mr. Matsui. In a way, your testimony puts us in a dilemma
because what we wanted to do is avoid a deficit in the trust
fund and that is why we came up with this.
Mr. Taylor. I understand.
Mr. Matsui. But now you are suggesting, and obviously you
are right, if what you are saying is correct, and I am assuming
that it is, we are going to create a deficit in the trust fund
anyway because the money will not be paid into the trust fund.
Mr. Taylor. Under the proposed legislation, we sacrifice
the fee with the 30-day limit, yes, that is correct.
Mr. Matsui. It creates a real problem for us. And obviously
the appropriations, $156 million short of what you are asking,
plays a role in that, although I do not know if the $156
million would solve this problem because I think your request
probably came before we made this decision or at least
simultaneously.
Mr. Taylor. I do not know that I could say it would solve
this problem, but again it allows us to address the competing
workloads a little more easily than we are able to do so now.
Mr. Matsui. See the problem is that I do not think any of
us want to micromanage. On the other hand, we want to try to
come up with a resolution of this and it does not sound like--
and again maybe when we hear from others--but it does not sound
like you are offering us any hope for some solution to this
problem right now.
Mr. Taylor. Well, I--
Mr. Matsui. I understand the problem which you raise and I
certainly appreciate that. On the other hand, it would seem to
me that, you know, we are trying to fix something right now,
and there are obviously some industry groups out there that
have a problem, and we would like to solve it without doing too
much damage to anybody, particularly the administration.
On the other hand, I think you have an obligation to at
least try to give us some ideas instead of saying, you know, we
are kind of stuck. We need $156 million more, you know.
Mr. Taylor. Congressman, I apologize if I have given that
impression.
Mr. Matsui. Maybe what you are suggesting is the fact that
you have no solution and you are not going to come up with one,
in which case we just have to make a tough decision, but it
just seems to me that--
Mr. Taylor. I would not want to leave you with that
impression because, as I believe I referenced briefly in my
statement, we do, first of all, consider this to be a process
that needs attention and it may be subject to improvement, and
for that reason the Commissioner has requested, and we are
currently in the process of doing, a review of the entire
process and looking for ways in which we can streamline and
make improvements that may allow us to address this workload in
a more expeditious manner than we have thus far.
Mr. Matsui. I appreciate your offer there. My time has run
out, but I just want to make a suggestion that all of us on
this subcommittee want to work this out in a way that is
reasonably acceptable to all parties. I mean nobody is trying
to be adversarial on this area.
Mr. Taylor. We would be anxious to cooperate.
Mr. Matsui. And we would hope that we can find some way to
achieve that goal.
Mr. Taylor. We would be very anxious to cooperate with the
subcommittee in trying to work out a solution.
Mr. Matsui. I thank the chairman.
Chairman Shaw. Thank you. You say that in 1999, the SSA
processed 200,000 fee payments to the attorneys. Could you tell
me why your Freedom of Information Officer, Mr. Blevins, said
that the SSA does not maintain this data when it was requested
by one of our later witnesses, Ms. Shor? Are you familiar with
that letter?
Mr. Taylor. I am not familiar with that response by Mr.
Blevins.
[The information follows:]
March 2, 2000
NOSSCR
Attn: Nancy Shor
6 Prospect Street
Midland Park, NJ 07432
RE: Freedom of Information Act (FOIA) Request
Dear Ms. Shor:
This is in response to the subject request for a copy of the data
reflecting the number of attorney's checks issued in each month CY1998
and CY1999.
We are unable to comply with your request since we do not maintain
the data you requested.
If you disagree with this decision, you may request a review. Any
appeal should be mailed within 30 days of receipt of this letter to the
Associate Commissioner for the Office of Program Support, Social
Security Administration, 6401 Security Boulevard, Baltimore, Maryland
21235 in an envelope marked ``Freedom of Information Appeal.''
Sincerely,
Darrell Blevins
Freedom of Information Officer
Mr. Taylor. Mr. Chairman, just looking at the request, I
notice that the request was for data month by month during
calendar years, and it may be that the data that was available
was not maintained on a monthly basis, but I do not know.
Chairman Shaw. Could you follow up on that?
Mr. Taylor. I certainly will be happy to follow up on that.
Chairman Shaw. And fill it in for the record.
[The information follows:]
The request was for data month by month during calendar
years, but we do not maintain that information for each month.
Chairman Shaw. As you know, the administration proposed
charging the attorneys for the cost related to the processing
of their fees. These costs, on average, were estimated to equal
6.3 percent of the fee and this percentage is now established
in law. The General Accounting Office will testify that the SSA
has developed a way to capture actual costs and that you
currently do not have a way to determine costs? Is that a
correct statement?
Mr. Taylor. I am not sure that it is exactly correct. We
did--
Chairman Shaw. How did you arrive at the 6.3 percent?
Mr. Taylor. Mr. Chairman, in arriving at the 6.3 percent,
we took available data that we had regarding the attorney fee
process including the number of petitions and the number of fee
agreements and information that we obtained about how much time
it took to process those two things and we looked at the
average payments that had been made under those processes on a
yearly basis, and I believe using those two bases of
information, and then extrapolating from some debt collection
information that we had access to, we came up with a figure of
6.3 percent. Basically we did the best calculation we could to
figure out what the cost of the process had been in past years
and then taking the number of payments and the average fee
payment based on historical data, what percentage of that would
cover those costs?
I might add that as a part of the review process that is
underway now, we are going to develop a better methodology for
examining and capturing those costs so that we can carry out
the obligation of updating that fee assessment figure if it
turns out it is not--it is overstating, for example, the true
cost of the process.
Chairman Shaw. Mr. McCrery.
Mr. McCrery. Mr. Taylor, have you considered issuing just
one check to the attorney, made out jointly to the beneficiary
and the attorney, as a possible way to make the system more
efficient, to cut down on the time it takes to process these
things?
Mr. Taylor. This is a possibility that has been given
consideration in the past. We have not considered it recently.
I would just say that we have a couple of reservations about
that, one of which is that by doing so, if my understanding is
correct, we would be issuing a check in the full amount of past
due benefits that would be jointly drawn to the claimant and to
the attorney, and when it was negotiated, the attorney would
then take the fee out of those funds.
One of our concerns is that would then place outside of the
Social Security Administration's control the actual payment of
Social Security benefits to the beneficiaries and we would have
lost any control over the actual amount or the timing. We would
be depending upon a process outside of the Social Security
Administration to do that.
The second, major consideration is one of operational
issues. It would be a substantial operations and systems
undertaking to develop a system that would efficiently prepare
and execute two-party checks involving attorneys who are third-
parties who are not anywhere in our database presently. There
would be a substantial amount of work that would be involved in
doing that, but in answer to your question we have not recently
considered that possibility, but those are a couple of the
reservations that we had when this was considered some time
ago.
Mr. McCrery. Well, of course, outside of the Social
Security arena, in lawyers' offices everyday checks are made
payable to both the claimant in a personal injury case and the
attorney, and the division is made in the attorney's office.
And it happens everyday. So I do not know why you could not
enlist the services of the attorney representing the client to
effectively do what you are doing in Baltimore by dividing the
check and issuing two checks. He could do all that for you. All
you would have to do is withhold the 6.3 percent of 25 percent.
Just something to consider. I frankly, I just got it from this
list of questions that somebody handed me and it seemed like a
good idea to explore.
Mr. Taylor. Okay.
Mr. McCrery. I am an attorney and I do not trust all
attorneys either, but generally they are honorable people and
they will do what they should do with their clients and if they
do not, they can get in a lot of trouble. So, you know, maybe
we could make it a federal crime not to divide the payment
properly.
Mr. Taylor. I was trying to avoid mentioning the third
reason.
Mr. McCrery. Well, that was implicit in your first reason,
but anyway something to think about.
Chairman Shaw. Mr. Hulshof.
Mr. Hulshof. Thank you, Mr. Chairman. Are you an attorney,
Mr. McCrery? I am a recovering attorney myself. Let me ask a
question regarding something that is in your extensive
statement, Mr. Taylor, on page eight that indicates in the
middle of the page that SSA does not have a tracking system in
place from the start to finish of the process to measure the
time it takes to pay attorneys' fees.
You say generally, though, the fees can be paid within 60
days and I guess, forgive me, a very simplistic question, how
do you know if you have no tracking system?
Mr. Taylor. That is a great question. The answer is both
things are true. We do not have a tracking system. This 90 days
was done from a special study that we did just before the
legislation that enacted the 6.3 percent assessment, and that
is what the special study showed and I do not have the exact
data that the study disclosed. I am sure we could make that
available, if necessary.
Mr. Hulshof. Let me ask, too, that the legislation that the
chairman and Mr. Matsui have introduced, that I have
cosponsored and others on this committee, you indicate that the
Social Security Administration might forfeit as much as two-
thirds of the attorney fees assessments, and again how do we
know that if you cannot track the processing time?
Mr. Taylor. Again, I would have to confirm this. It may
have been based upon the results of this special study. Looking
at the number of cases that were done within 30 days versus
those that were done outside of 30 days.
Mr. Hulshof. Do you have available or maybe some of your
folks behind you of what percentage of SSI cases are
represented by counsel? Do you have that available?
Mr. Taylor. Yes, I do. According to data that we maintain,
in fiscal year 1999, just over 43 percent of SSI cases that
went to a decision before an administrative law judge were
represented by attorneys. Now there were more that were
represented by non-attorneys, but for counsel that is the
figure.
Mr. Hulshof. Refresh my recollection how that compares to
the percentage in disability cases?
Mr. Taylor. 73\1/2\ percent of what we would normally call
the title II disability cases were represented by attorneys.
Mr. Hulshof. I know that the General Accounting Office
reports that the Association of Administrative Law Judges
believed that extending the direct payment of attorneys' fees
to SSI cases would actually benefit the claimants because cases
with attorney representation in their belief have a better
chance of receiving a favorable decision. Do you have an
opinion, agree or disagree with that report?
Mr. Taylor. I have not seen that report. I have heard the
speculation that that might account for some of the disparity
and I cannot say that it does not account for some of the
disparity. I would be hard-pressed to say that it accounts for
all of it because there are other factors involved in whether
or not a claimant is represented.
Attorneys, I am sure, exercise a screening function of
their own in determining whether or not to take a case for
representation. There are requirements in many states where
interim assistance is being provided that claimants pursue
their claims, at least through the hearing level, so there may
be some less likely favorable decision cases reaching hearing
levels in higher proportions.
Mr. Hulshof. My time is about to expire so probably this
would be my final question. Would the Social Security
Administration support extending attorney fee withholding to
the SSI program or not?
Mr. Taylor. Our present position is that we would not
support that and I would be happy to share some of the reasons
if you would like.
Mr. Hulshof. If you could do that--
Mr. Taylor. Very quickly.
Mr. Hulshof.--I will give you the opportunity, yes, sir.
Mr. Taylor. Sure. First of all, it has been the position
ever since the SSI program was enacted that--and this was done
specifically by the Congress--that these cases because of the
purpose of the program and the needs of the claimants, would
not be appropriate for a withholding process of their initial
payment.
I think that is probably the main reason and it goes to the
fact that many of these claimants, while they have been waiting
for their case to be decided, have many pressing needs of basic
necessities and that to remove this 25 percent from the initial
payment might put them in a worse position, at least
temporarily.
Secondly, as I mentioned before, many claimants are
receiving interim assistance and they have agreements to
reimburse the states for that assistance and if 25 percent of
accumulated benefits were carved out for direct payment off the
top, we are not sure how the choice would be made as to who got
paid first if there had to be a choice made.
And finally, this is a substantial operational endeavor for
us because it would require our 1,300 field offices to get into
the business of making attorney fee payments and they do not
currently have to do that. Currently, the payments are confined
to the small number of half a dozen or so processing centers.
You would have to bring up a manual process, at least
initially, and over 1,300 offices would be very difficult to
manage.
We have done a very quick estimate of the impact and cost
of doing this, and it runs at $23 million and 400 work years
annually. This is our initial rough estimate of what it would
cost to extend the direct payment to title XVI cases, and, of
course, those work years would be competing against work years
that are needed for other priority workloads.
Mr. Hulshof. Thank you.
Chairman Shaw. Mr. Taylor, I want to pursue a question, the
questioning that Mr. Matsui was doing awhile ago, because
frankly the answer you gave I think was not totally in response
to what he was saying, what he was trying to get at. And that
question is why do you not just write the fee at the same time
that you write the settlement figure? All you are doing is
requiring someone to go back to the file a second time. And why
can't all that be done at the same time?
Now you talked about there may be other litigants and what
not. But if you have an assigned fee arrangement, at that point
you know at least exactly what that particular litigant is
entitled to. Why not just go ahead and write the fee at the
same time?
Mr. Taylor. Mr. Chairman, I am sorry if I was not--
Chairman Shaw. Well, you may have been and I may have not
understood it. So explain it to me. I do not mean to say that
you were not responsive, but--
Mr. Taylor. Let me just try. We want to make accurate
payments to claimants and we want to make accurate fee payments
to attorneys. And those two things have to go hand in hand.
Chairman Shaw. Now if they have a fee agreement and it is a
certain percentage with a $4,000 cap, what is so difficult
about that?
Mr. Taylor. In fact, the average fee agreement is not
$4,000. The average fee agreement paid is about $2,500. So--
Chairman Shaw. Well, it is a percentage with a $4,000 cap.
Mr. Taylor. And my point is that the fee agreements are
most often paid based upon a percentage of the past due
benefits and in order to calculate accurately the past due
benefits in many cases, there is additional development that
must be done such as the calculation of the offset by workers'
compensation, for receipt of workmen's compensation.
Chairman Shaw. But you do not pay the claimant until you
know how much you owe them.
Mr. Taylor. Well, we have placed a priority in the Social
Security Administration upon making prompt payments to the
claimants because we figure they have been waiting for these
payments.
Chairman Shaw. Right.
Mr. Taylor. So we take a risk that there may need to be an
adjustment at some point a little ways down the road of the
claimant's payments. We want to get them in payment status and
give them as much of the past due benefits as we can.
Chairman Shaw. Well, would it not be just as easy to go
back and get the overage from the attorney as it is the
claimant? Probably easier; would it not? I mean you are talking
about lesser dollars and you are talking about deeper pockets
in most cases. So I mean if you overpay a claimant, in all
probability it is going to be very difficult to get any of the
money back except deduct it from future payments.
If you overpay the lawyer, to begin with, you are talking
about a maximum of $4,000, and if there is a calculation that
has to be made where the lawyer has to return a certain
percentage of that, I do not see the difference, and I think
this may be probably the nut of the problem here is that if you
wait until there is very little possibility of an offset, and
then you pay the attorney--I do not think that is quite fair. I
think you should, as you pay the claimant, go ahead and pay the
attorney.
And I would guess that the little bit of money that you may
lose would be more than offset by the administrative costs that
you would save in not having to go back to the same file and
calculate it. As long as you got the papers spread out, figure
out what you owe everybody and get rid of it.
Mr. Taylor. Do it all at once.
Chairman Shaw. If you would look into that--I think
somebody is handing you a note there. In fact, I know she
handed you a note.
Mr. Taylor. I better read it. Well, I have had the record
corrected for me here. The current payment that is made, the
initial payment, is simply to put the claimant into current
payment status. I was in error. The back payment is made at the
time that the payment is made to the attorney. So I think I may
have misled you.
Chairman Shaw. Wait a minute. What you are saying is the
amount that the attorney's fees would apply to in the
arrearages, I assume--I assume there is no attorney's fees on
what goes forward.
Mr. Taylor. That is right.
Chairman Shaw. It is only on the arrearages--that then is
made at the time?
Mr. Taylor. At the time the past due payment is made to the
claimant.
Chairman Shaw. Oh, okay.
Mr. Taylor. So I am sorry if I--
Chairman Shaw. Well, then that makes sense.
Mr. Taylor. Okay.
Chairman Shaw. Okay. Do you have anything further to
follow-up on that?
Mr. Matsui. I am sorry. In view of the fact that I did not
get the answer that I thought I understood, if I could follow
up on this. So, in other words, the initial payment to the
claimant is not the amount adjudicated. Is the amount that from
certain date forward the claimant received money to keep him or
her in a state of where they can survive? Is that kind of the
purpose of that initial payment?
Mr. Taylor. Get them in payment status.
Mr. Matsui. Okay. Then when is the final adjudicated
payment made to the claimant? How many days usually goes by?
Because I think that is a critical issue as well. Do you happen
to know that number?
Mr. Taylor. I do not know that number off the top of my
head.
Mr. Matsui. See the reason I am asking that, I mean I know
they need the initial payment, but most of these people, if you
are disabled, and it is a five, six, seven, $10,000 amount of
the adjudicated claim that is awarded, it would seem to me that
they need that money, too, because they are probably in
arrearage on rent payments and a lot of other things at the
same time. How many days goes by before they receive that
amount?
It seems to me that is kind of an important factor because
I mean if your priority is to pay the claimant, you know, I
would hope that somebody would know that. Perhaps somebody
knows in the back there because--on average, you know, is it
six months or six weeks? From what--and again, maybe--this
letter to Mr. Doggett dated February 16 this year from Mr.
Apfel says that the average processing time for these cases
from the date of decision to payment and the award notice to
the claimant is about 30 days. So is that a correct figure? So
basically what is it that then the entire--
[The information follows:]
February 16, 2000
The Hon. Lloyd Doggett
House of Representatives
Washington, D.C. 20515-3217
Dear Mr. Doggett:
This is in response to your letter concerning the implementation of
the new attorney user fee. You requested specific information
concerning the length of time it usually takes for fees to be paid,
what actions are being taken to speed up that process, when the actions
will be implemented and what the specific goals are for paying the
fees.
The majority of cases involving the payment of attorney fees are
decided at the hearing level. The average processing time for these
cases from date of decision to payment effectuation/award notice to the
claimant is about 30 days. Prior to the recent legislative changes, the
Social Security Administration (SSA), as required by law, provided a
15-day administrative review period after the receipt of the award
notice, so the claimant, representative and the administrative law
judge or other adjudicator could review the approved fee amount. This
requirement delayed the processing of attorney fees by at least 30 days
after the date the claimant received past-due benefits. In addition,
after the decision is made that the individual is eligible for
benefits, SSA cannot calculate the past-due benefits due to the
claimant and pay the attorney until all the development on the
nondisability factors of the case is complete. So in some cases, we
begin paying current benefits to the beneficiary pending completion of
development and then pay the past due benefits later.
SSA does not have a direct measurement of attorney fee processing
times, however, attorney fees are generally paid within 90 days of the
award notice. Some cases take significantly longer to pay because of
the need to develop additional evidence, such as proof of worker's
compensation payments. SSA estimates that as a result of changes that
we have made while implementing P.L.106-170, including the elimination
of the 15-day pre-payment holding period for fee agreement payments,
payments of attorney fees can now generally be made within 60 days of
the award notice. After effectuating payment to the beneficiary, a
separate action is required to process the attorney fee. We manually
compute the fee, then the user fee, and finally update systems and
effectuate payment through a separate manual payment process. The new
attorney fee process, as described above, was implemented on February
1, 2000.
You may be interested to know that last year, when the
Administration proposed legislation to improve the attorney fee payment
process, it included a provision to deposit the funds raised as a
result of the 6.3 percent user fee to SSA's Limitation on
Administrative Expenses (LAE) account. We intended to use the funds
raised by the fee to improve the administration of the payment process.
However, when the provision establishing the user fee was passed, as
part of P.L. 106-170, it did not provide for the fees to be deposited
in SSA's LAE account. Therefore, we are not receiving additional
resources, which hinders our ability to make additional significant
improvements on our current performance.
We implemented the changes described above to reduce the attorney
fee processing time as much as possible, consistent with maintaining
the program's integrity, and in concert with the other automation
improvements currently underway within the Agency.
Thank you for your interest. I hope this information is helpful to
you.
Sincerely,
Kenneth S. Apfel
Commissioner
of Social Security
Mr. Taylor. I am advised that the payment is made on
average within 60 days.
Mr. Matsui. 60 days, not 30 days.
Mr. Taylor. Which is about the same time that we think we
can make the payment to the attorney which would be made at the
same time.
Mr. Matsui. Okay. I guess this 30 days then refers to the
kind of initial payment?
Mr. Taylor. Well, it could refer to--I'm not sure what it
refers to actually.
Mr. Matsui. Yeah, you may want to look at this letter.
Mr. Taylor. I will.
Mr. Matsui. Because it is different from your letter, from
what you just said.
Mr. Taylor. Yes.
Chairman Shaw. What percentage of the claimants is Workers'
Comp involved; do you know the percentage of that?
Mr. Taylor. We do not maintain that information.
Chairman Shaw. I understand from the people behind you that
you just flat do not have that information.
Mr. Taylor. Yes.
Chairman Shaw. Well, at prior hearings we went through this
claims process, from the day the petition was filed to the day
of settlement. So I mean we have traveled through this and it
is terribly long. I mean it is unconscionably long particularly
when you are talking about people many of which are desperate.
As Bob said, their rent is in arrearage and what not. I mean
they can really be devastated during this period of time.
I think we need ways, once the case has been adjudicated,
why you have to go 60 days. I mean if you or I were the
defendant and went 60 days and there was an appeal involved,
our bank accounts would have been frozen and everything else,
and there is no reason why we cannot pay these claims
efficiently. Obviously, and I think we probably all agree, you
do not want to pay the attorney before you would pay the
client. However, it should be done simultaneously and really it
should not take 60 days.
Mr. Taylor. Well, I would like to have the opportunity to
provide exact information on that.
Chairman Shaw. I do not understand. Perhaps we will have to
have another hearing to really zero in on that information, so
that we are well advised as to what exactly--what is going
wrong here, and it should be that these payments should be made
very expeditiously. I think Mr. Collins had another question.
Mr. Collins. Mr. Taylor, I am a non-lawyer member of this
committee. So my question will not be in favor of the lawyers.
My understanding is that their fee is based on the back payment
that is due.
Mr. Taylor. That is correct.
Mr. Collins. What is the length of time that it takes to
process a claim from an applicant that is represented by an
attorney or a lawyer versus those who are not?
Mr. Taylor. Congressman, I am not aware of a report that
makes that distinction. There may be one. I am not aware of one
that makes that distinction. I have no reason to believe that
there is a great distinction, but I really cannot answer your
question.
Mr. Collins. But the length of time that it takes to
process the claim also determines the back pay?
Mr. Taylor. In general, that is right, yes.
Mr. Collins. Okay. It seems to me that the lawyer's fee
ought to be based on the date of a calculation that would be
back payment from the time the first claim was filed to the day
the attorney took the case so that any extended period of time
to process that claim would not increase the attorney's fee.
You might get your claims processed a little bit faster by the
attorney because I am told by the administrative law judge that
a lot of these attorneys do not come to the hearings prepared
and it drags out the case and the longer you drag it out, the
percentage goes up with the amount of back payment.
Mr. Taylor. Congressman, I am sure that happens in some
instances, but in other instances, many instances, I believe,
attorneys who represent clients do a fine job before our
administrative law judges.
Mr. Collins. Well, I tell you what. It just bothers me that
we have a government agency that a person who is entitled to
benefits from that agency would have to go hire a lawyer to
represent them before the agency, because I understand all of
the questions that become involved in it, too. Someone has to
make a judgment. Sometimes the judgment is not according to the
applicant's intent.
But I just, you know, it bothers me, too, that the longer
you drag it out and processing the system, through the system,
the larger the payment is, or the larger the fee is, and if you
could handle the thing up front or have a set fee that when
that lawyer took the case, they would not be enhanced by a
longer period of time or dragging it out. Maybe they would get
their stuff together, their act together when they went before
these administrative law judges and help this process along
much better than it has been done in the past. Thank you.
Chairman Shaw. Is there a process by which these cases can
be reviewed so that some of them can be kicked out as deserving
of payment before you get to that hearing process? Do you have
to go through the hearing process on all of them? Is there a
review process once these claims are filed where SSA may say
well, gee, this one should have been allowed in the first place
and just kick it out without a hearing? I mean pay it.
Mr. Taylor. Well, yes, within our existing process, we
always have the option to decide the case favorably without
holding the hearing and that happens in a significant number of
cases currently.
Chairman Shaw. For the record, and we went through this
once before, once somebody actually files their claim, what is
the period of time before the hearing?
Mr. Taylor. The time from the request for hearing to the
date the hearing is held?
Chairman Shaw. I guess the claim is the request for
hearing. I suppose that is what it is.
Mr. Taylor. The reason I asked if you went from the date
that the initial application for benefits was filed and took it
forward to the date that the--
Chairman Shaw. Well, it has got to be denied by--
Mr. Taylor. That is right.
Chairman Shaw. And then once it is denied, that is when it
gets into your court.
Mr. Taylor. That is right.
Chairman Shaw. So this is, in effect, an appeal process?
Mr. Taylor. Our current average processing time, and I
would be happy to give you the exact figure, and I am quoting
this from memory, is something slightly in excess of 300 days
from the date the request for hearing is filed to the date that
the decision is issued. Now this is an average of all cases,
favorable and unfavorable.
[The information follows:]
Average processing time from the date of the request for a
hearing to the date the decision is issued is 301 days.
Chairman Shaw. So you add 60 days to it, it is going to be
a year for you to get a hearing.
Mr. Taylor. And we have done a great deal, Mr. Chairman, in
the past several years to bring that figure down.
Chairman Shaw. And what percentage of the appeals prevail?
Mr. Taylor. About 55 percent prevailed in the past year.
Again, I could give you the exact number, but I think that is
pretty close.
[The information follows:]
Including partially favorable decisions, 54.5 percent of
hearing level cases are allowed.
Chairman Shaw. That is close enough. Okay. Anybody else
have anything else?
Mr. McCrery. Mr. Chairman, just one more question.
Chairman Shaw. Okay.
Mr. McCrery. Mr. Taylor, I am told that there are two
arrangements that an attorney can make for being paid a fee.
One is a straight 25 percent of the arrearages and the other is
that he could itemize his expenses and submit that to the
Social Security Administration for payment; is that right?
Mr. Taylor. That is correct.
Mr. McCrery. Can you tell me how many attorneys opt for the
latter, itemizing the expenses, the percentage?
Mr. Taylor. Congressman, I cannot tell you how many
attorneys, but I can tell you that as a percentage of fee
payments that are made, our most recent data current through
this year is that about 12 percent of the payments are based
upon that fee petition, the detailed itemization process, and
88 percent are fee agreements.
Mr. McCrery. And I assume it takes longer to process the
itemization--
Mr. Taylor. That is correct.
Mr. McCrery.--arrangement?
Mr. Taylor. That is correct.
Mr. McCrery. Does the bill that we are considering make a
distinction between the two types of reimbursement?
Chairman Shaw. I do not think so, no.
Mr. McCrery. We probably should do that. If an attorney
chooses to itemize--
Chairman Shaw. That is a good point.
Mr. McCrery.--I do not think he should be surprised that it
is going to take longer to get his payment. Thank you.
Chairman Shaw. I think also--and this is giving me a little
trouble right now--that we do not want to get the attorneys'
fees out in front of the claimants' payments, but I do not
think either one should go 60 days unless there is some
complicating factor. I think we need to look further into that.
Mr. Taylor, thank you.
Mr. Taylor. Thank you.
[Questions submitted by Chairman Shaw, and Mr. Taylor's
responses, are as follow:]
1. If representatives are entitled to world class service, why
hasn't SSA developed performance standards for this workload
and developed methods for measuring this performance before
now?
SSA believes that attorneys are entitled to world class
service. However, SSA uses separate systems to track decision
dates and attorney fee payment dates, and these two systems are
not compatible. Moreover, the main system arranges its records
according to the beneficiary's data only. This increases the
difficulty of tracking attorney payment data. Therefore,
although SSA can conduct special runs to obtain fee payment
processing data, it cannot obtain this data on an ongoing
basis. Because of competing priority workloads, SSA did not
routinely conduct these special runs. Therefore, SSA did not
develop these performance standards.
2. Recently, I wrote to the Commissioner regarding whether SSA
should increase the $4,000 limit under the fee agreement
process. He agreed that an updated assessment of the issue is
appropriate. What is the status of this assessment?
A recommendation regarding action on the $4,000 limit is in
preparation for the Commissioner's review.
3. Does SSA maintain data on attorney fees charged in SSI and
disability cases? Is there anything to show, as indicated by
the National Senior Citizens Law Center, that many attorneys
lower fees for SSI cases? If so, what is the difference in
fees?
SSA does not maintain a central data pool on fees for
representation. We have no evidence that attorneys generally
charge lower fees for working on SSI cases.
4. Why did SSA originally recommend that the attorney fee
assessment be set as a percentage of the fee as opposed to a
flat fee? Do you have information to show that SSA's costs
increase as the amount of the fee increases? What are your
views regarding expressing the user fee as a fixed amount
instead of a percentage? Why?
SSA designed the current rate to recover $26 million, the
estimated cost in 1995 of processing attorney fee payments and
collecting the assessment. SSA does not have information which
shows that processing costs increase as fee amounts increase.
However, we prefer the current method of assessment to a flat
rate for several reasons. A fixed dollar amount would be unfair
to those who had small fees, because the flat assessment would
represent a very large proportion of the attorney's fee. In
fact, some members of Congress objected to a fixed dollar
amount in the past for this reason. An equal percentage for all
cases distributes the cost of the service proportionately among
the cases. Furthermore, charging a fixed rate for all cases
would prevent SSA from covering the rising cost of processing
fees.
5. Some critics of the present attorney fee payment process
have proposed that the Prompt Payment Act provisions be
expanded to cover attorney fee payments so that interest and
late charges can be assessed on SSA when payment are not made
timely. What is SSA's position on this proposal?
The Prompt Payment Act (PPA) allows vendors from whom the
government purchases goods or services to collect interest on
late payments for those sales. However, SSA does not purchase
services from the claimants' attorneys. Instead, it provides a
service by collecting and paying their fees. SSA does not
support expanding the PPA to include late fee payments. Certain
fee actions, such as fee petitions or cases involving offset
computations, require longer to process. Therefore, it is
possible that SSA would have to pay an interest penalty even
when it properly processed an action.
6. Based on what you have learned from your review of the
attorney fee process so far, do you expect the rate to be
reduced for 2001?
Our review of the attorney fee process is not yet complete.
It would be premature at this time to judge whether the rate
should be reduced.
7. Testimony from Ms.Shor said that when SSA pays
electronically, it pays the claimant but does not pay the
attorney at the same time. Why is this? In what percentage of
cases, theoretically, could the benefit and the fee be paid at
the same time? In what percentage of cases are they actually
paid at the same time? Please explain any difference in the two
figures.
The SSA mainframe payment system is designed to recognize
only beneficiaries and store data that is based on the
beneficiary's social security number. In order to pay a non-
beneficiary, we must use a manual payment process. Therefore,
we cannot pay the beneficiary and attorney at exactly the same
time.
8. What was the Administration's position on the disposition of
the proceeds of the attorney fee assessment? Specifically, did
OMB and SSA agree on the proposed legislative language on the
issue?
OMB and SSA agreed on the proposed legislative language to
deposit the funds raised as a result of the 6.3 percent user
fee to SSA's Limitation on Administrative Expenses Account
(LAE). OMB and SSA also agreed on the final legislative
language to deposit the funds to the Trust Fund.
9. How much time elapses in attorney fee cases, on average,
between the issuance of the favorable decision and the issuance
of the first check to the claimant?
We estimate that the average processing time for hearing-
level cases from the date of the decision to payment
effectuation/award notice to the claimant is about 30 days.
10. What percentage of attorney fee cases involve worker's
compensation issues? What other types of issues require
additional development by SSA before the past-due benefits can
be computed and paid? What percentage of the attorney fee
caseload do these other issues constitute?
Based on a special system selection for the month of May
2000, we estimate that 25% of the attorney fee payment cases
involved worker's compensation. The other types of issues
requiring development before the past-due benefits could be
calculated are prisoner suspension, verification of military
service and subsequent auxiliary development. Unfortunately, we
do not maintain management information on these workloads with
respect to attorney involvement.
11. Why was SSA unable to provide information about the number
of attorney fee checks issued in each month in calendar year
1998 and 1999 in response to Nancy Shor's Freedom of
Information Act request when you were able to provide some of
these data at the June 14 hearing?
The request was for data month by month during calendar
years, but we do not maintain that information for each month.
Chairman Shaw. Our next witness is from the General
Accounting Office. We have got Barbara Bovbjerg, who we welcome
back. She is the Associate Director, Education, Workforce and
Income Security Issues, and she is accompanied by Debra
Sebastian and Valerie Melvin. Welcome and again, you are
familiar, Barbara, with this committee. We welcome you back.
Again, we have your full testimony and you may proceed as you
see fit. I finally mastered your name.
Ms. Bovbjerg. I noticed that. I was very impressed.
Chairman Shaw. I had to work on it.
Ms. Bovbjerg. I have a unique identifier besides a Social
Security number.
STATEMENT OF BARBARA D. BOVBJERG, ASSOCIATE DIRECTOR,
EDUCATION, WORKFORCE, AND INCOME SECURITY ISSUES, HEALTH,
EDUCATION, AND HUMAN SERVICES DIVISION, U.S. GENERAL ACCOUNTING
OFFICE; ACCOMPANIED BY DEBRA SEBASTIAN, ASSISTANT DIRECTOR, AND
VALERIE MELVIN, ASSISTANT DIRECTOR, ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION
Ms. Bovbjerg. Mr. Chairman and members of the subcommittee,
I really am pleased to be back before this body to discuss
issues regarding payment of attorney fees in Social Security's
disability programs. The Disability Insurance and Supplemental
Security Income programs provide benefits to millions of people
with severe long-term disabilities. At any time during SSA's
disability determination process, applicants may seek help from
an attorney in pursuing their claim and attorneys are entitled
to be paid if the benefit claim is successful.
Under the DI program, SSA pays attorney fees directly from
any past-due benefits awarded to the claimant. Complaints about
the timeliness of these payments coupled with a new 6.3 percent
user charge on attorneys has raised questions about this
payment process.
Although my written statement covers a variety of issues
related to the attorney fee payment, I would like to focus my
oral remarks on just three aspects of this topic: the process
itself, the costs associated with it, and the proposed changes
to the way the user charge is assessed.
My testimony is based on our ongoing review of the attorney
fee payment process mandated by the Ticket to Work Act.
First, let me talk about the process. Although SSA has been
paying attorney fees from past-due benefits for 30 years, the
process remains inefficient and involves many steps, a lot of
them manual. Once an applicant is found to be disabled and SSA
officials approve the attorney fee in principle, the case will
be forwarded to an SSA processing center for determination of
benefits.
SSA must calculate not only what benefits have been earned,
but also to what extent they should be offset by any other
payments like workers' compensation. This process can take six
months or more to complete.
Once the benefit amount is determined, SSA prepares an
award notice to the beneficiary which also states how much will
be paid to the attorney and how much is for past-due benefits.
At this point, for SSI cases, SSA pays beneficiaries all of the
past-due benefits and the beneficiaries assume responsibility
for paying the attorney.
For DI cases, however, SSA pays the beneficiary but
withholds the attorney's fee for separate payment. This process
involves a manual calculation of the 6.3 percent user charge to
be withheld and hand carrying lists of attorneys and the fees
owed to them to staff, who then enter these data manually into
a system that ultimately gives Treasury the information to
write and mail a check.
We do not know what this process costs. The 6.3 percent
user charge specified in the Ticket to Work Act and designed to
recover SSA's costs came from an SSA estimate made in 1994.
Actual costs are not known because SSA was not previously
required to capture them in its information systems and so had
no methodology to do that.
For the future, however, SSA is indeed developing such a
methodology. They told us last month that they would capture
the costs of withholding and paying the attorney fees but not
the costs of the ALJ time spent reviewing and approving the
fees, although these are costs that the law appears to require
and were included in the original 6.3 estimate.
However, in commenting on a draft of my statement
yesterday, SSA has said that they do plan to capture these
other costs, but now we have not had time to determine really
which approach is ultimately to be taken. But if SSA indeed is
to recover the ALJ review costs, it will be important not only
to begin collecting this information right away but also to
separate the costs associated only with DI cases so the DI
attorneys are not shouldering costs associated with SSI claims.
We hope to be able to report more on these issues in December.
Finally, let me turn to the proposed changes in the user
charge, specifically whether to waive the charge if the payment
is not timely. SSA has struggled with making timely payments to
attorneys. Legislation is proposed that would require the
attorney fees to be paid within 30 days or the user charge
would be waived. The available data suggest that SSA will have
trouble meeting this deadline. While it is possible for SSA to
increase the efficiency of the process, it will be important
for attorneys to understand that some factors that delay
payments are outside the agency's control and are unlikely to
change regardless of a time limit.
In conclusion, SSA is still in the early stages of
implementing changes required by the Ticket to Work Act and
data are not yet available on the effects of these changes or
on the underlying cost of processing attorney fees. We look
forward to learning more about this process and working with
SSA to complete our evaluation. And that concludes my
statement. We are happy to answer any questions you have. I am
the program person, but I was afraid of having to have a lot of
notes passed up, too, and so I have brought with me Debra
Sebastian, who is our audit and accounting expert, and Valerie
Melvin, who is our systems expert.
[The prepared statement follows:]
Statement of Barbara D. Bovbjerg, Associate Director, Education,
Workforce, and Income Security Issues, Health, Education, and Human
Services Division, U.S. General Accounting Office
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).\1\ Our final report is
due to the Congress by December 2000.
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\1\ P.L. 106-170 primarily focuses on strategies to help disabled
beneficiaries work by providing access to vocational rehabilitation,
employment, and other support services.
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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
The DI program, created in 1954, provides monthly cash
benefits to workers who have become severely disabled and to
their dependents and survivors. These benefits are financed
through payroll taxes paid by workers and their employers and
by the self-employed. In fiscal year 1999, 6.5 million
individuals received DI benefits. The SSI program was created
in 1972 as an income assistance program for aged, blind, or
disabled individuals whose income and resources are below a
certain threshold. SSI payments are financed from general tax
revenues, and SSI recipients are usually poorer than DI
beneficiaries. In fiscal year 1999, about 5.3 million blind and
disabled individuals received SSI benefits.\2\ For both
programs, disability for adults is defined as an inability to
engage in any substantial gainful activity because of a severe
physical or mental impairment. The standards for determining
whether the severity of an applicant's impairment qualifies him
or her for disability benefits are set out in the Social
Security Act and SSA regulations and rulings.
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\2\ Some DI benefit recipients have incomes low enough to qualify
them for SSI as well and receive benefits from both programs.
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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.\3\ In fiscal year 1997, about 70 percent
of all cases decided at the ALJ-hearing level involved
representatives.
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\3\ Data from fiscal year 1997 show that the percentage of
favorable hearings decisions for claimants with representation was
about 58 percent, compared with 39 percent for individuals without
representation; however, because attorneys might select only cases that
they feel will result in a favorable decision, the data might be
misleading.
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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 onset of the illness or injury to the time when
the beneficiary begins receiving monthly payments. 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.\4\
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.
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\4\ In certain fee agreement cases, attorneys may request fees up
to $5,000 if they feel that work on the case warrants a higher fee.
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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
While SSA has been paying attorney fees for over 30 years,
the payment process itself is inefficient, and the costs of the
process are not known. Approving and paying attorney fees is a
complex process that involves many steps; a number of staff in
different units and locations; and various information systems
that are not linked and that, therefore, require considerable
manual intervention. Regarding the costs to administer this
multistep process, we have not yet fully determined whether
SSA's past estimate appropriately captured the costs associated
with administering attorney fees; however, the agency is
currently developing a way to capture actual costs.
The Payment Process Involves Many Steps
Attorneys are compensated for their services through either
a fee agreement or a fee petition. Attorneys told us that the
fee agreement is usually an easier, quicker way to get paid and
that, although the fee petition is useful, it is also a more
cumbersome tool used primarily when potential fees exceed the
statutory limits or when attorneys were unable to file a fee
agreement at the beginning of a case. In 1999, fee agreements
accounted for about 85 percent of attorney payments, and fee
petitions accounted for the balance.
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.\5\ 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.
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\5\ All parties involved--SSA, the beneficiary, and the attorney--
may question the amount of the attorney's fee, and the fee may be
changed if warranted.
[GRAPHIC] [TIFF OMITTED] T7585.001
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 Ticket to Work Act requires SSA to impose an
assessment, or user fee, to pay for the costs the agency incurs
when paying attorneys directly from a claimant's past-due
benefits. For calendar year 2000, the act established the user
fee at 6.3 percent of the attorney fees; for calendar years
after that, the percentage charged is to be based on the amount
the Commissioner determines necessary to fully recover the
costs of ``determining and certifying'' fees to attorneys, but
no more than 6.3 percent.
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
According to the National Organization of Social Security
Claimants' Representatives (NOSSCR),\6\ individual attorneys,
and SSA officials, SSA often has trouble making timely payments
to attorneys. Processing attorney fees represents a small part
of SSA's overall activities--in 1999, we estimate that SSA
processed about 6 billion beneficiary payments and SSA reported
it processed less than 200,000 attorney payments. Additionally,
SSA officials told us that they view such responsibilities as
paying beneficiaries as more directly linked to their mission
than paying attorneys. As a result, SSA has not routinely
gathered and monitored performance data on the length of time
it has taken to pay attorneys. However, recently tabulated data
show that from January 1995 through May 2000, only 10 percent
of attorney fees for fee agreements were paid within 30 days
from the time of the beneficiary is put on current-pay status
to payment of fees. As figure 2 shows, there is a wide range of
elapsed processing times for payments.
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\6\ NOSSCR is an interest group for Social Security lawyers.
[GRAPHIC] [TIFF OMITTED] T7585.002
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.\7\ 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.
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\7\ Before the Senior Citizen's Freedom to Work Act of 2000, when
retired beneficiaries worked, benefits were lowered according to a
formula based on their earnings. Under the new law, beneficiaries at
the full retirement age of 65 can earn any amount without reductions in
their benefits. Adjusting benefits and notifying affected beneficiaries
created a temporary surge in SSA's workload.
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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 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
Aside from the delays that are outside its control, SSA is
aware that there are steps it could take to make the process
more efficient. For example, agency officials have said that
instituting direct deposit of attorney fees is more efficient;
it could shorten the time it takes for the fee payment to reach
the attorney, and could eliminate delays that result when
attorneys change their addresses without notifying SSA.\8\ SSA
currently pays 65 percent of beneficiaries by means of direct
deposit and wants to expand this approach to all its
transactions.
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\8\ SSA would need information such as attorneys' Social Security
numbers or tax identification numbers to make direct deposit payments
to attorneys.
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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.\9\ 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.
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\9\ The Office of Systems is in the early planning and analysis
phase for this modification effort. Therefore, the extent of the actual
modifications and when the work will be completed have not yet been
determined.
Expressing the User Fee as a Fixed Amount Instead of a
---------------------------------------------------------------------------
Percentage
A number of issues surround the question of whether the
user fee should be expressed as a fixed amount or as a
percentage, and these are linked in large part to the question
of what costs the user fee should cover. On one hand,
expressing the user fee as a percentage of the attorney fee, as
is currently the case, assumes that the costs SSA incurs in
processing user fees grow in proportion to the fees. This could
be the case, for example, if an ALJ spends extra time reviewing
a fee petition in cases involving more activity and larger
fees. On the other hand, expressing the user fee as a fixed
amount assumes that the costs of processing the attorney fees
are relatively the same and, therefore, a higher attorney fee
does not translate into higher processing costs. This could be
the case if the costs are fixed and do not vary from case to
case.
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
Attorneys, NOSSCR, and advocates have discussed various
changes related to attorney fees: issuing joint checks for
past-due benefits to both the attorney and the beneficiary,
raising the $4,000 limit on attorney fees allowable under the
fee agreement process, and extending the statutory withholding
of attorney fees to the SSI program. Each of these proposals
involves trade-offs that should be considered before its
implementation.
Joint Checks: Attorneys May Get Payments Sooner, but Policy and
Practical Issues Arise
Under the current process, when an individual receives a
favorable DI decision, SSA makes an effort to issue the
beneficiary's past-due benefits as soon as possible and
withholds the amount of the attorney fee. After the fee is
processed, Treasury issues a check to the attorney. Individual
attorneys have suggested changing this process from one in
which two separate payments are made to one in which a single
check for the total amount of the past-due benefits--made out
jointly to the beneficiary and the attorney--is sent directly
to the attorney. The attorney would deposit the check into an
escrow account and pay the past-due benefits, minus his or her
fee, to the beneficiary. Attorneys told us that joint checks
would help expedite the attorney fee process because the
beneficiary's money and attorney fees would be linked, and SSA
views paying beneficiaries as a priority.
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
Another change being discussed is raising the $4,000 cap on
attorney fees for the fee agreement process. As I explained
earlier, under the fee agreement process, attorneys can receive
25 percent of the past-due benefits up to $4,000, whichever is
less. By statute, the Commissioner of SSA has the authority to
adjust the cap at his or her discretion.
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.\10\
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\10\ The Association of Administrative Law Judges represents about
700 of the 1,100 administrative judges at SSA.
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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.
Mr. Chairman, this concludes my prepared statement. At this
time, I will be happy to answer any questions you or other
Members of the Subcommittee may have.
GAO Contact and Staff Acknowledgments
For information regarding this testimony, please contact
Barbara Bovbjerg at (202) 512-7215. Individuals who made key
contributions to this testimony include Yvette Banks, Kelsey
Bright, Kay Brown, Abbey Frank, Valerie Freeman, Valerie
Melvin, Sheila Nicholson, Daniel Schwimer, and Debra Sebastian.
Chairman Shaw. Mr. Matsui.
Mr. Matsui. Thank you, Mr. Chairman. Thank you, Ms.
Bovbjerg. I am learning, too. Do you happen to know from your
research on this issue how quickly the claimant is paid his or
her full amount after the adjudication of the claim is
resolved?
Ms. Bovbjerg. The data we have on how long it takes is in
figure two of our statement and we got this from SSA. This
represents processing time, times taken from January 1995 to
May 2000, and my understanding is that the time is measured
from the point when the individual goes into current pay
status--that is, when they can begin the process of getting
their monthly benefit.
Mr. Matsui. Okay.
Ms. Bovbjerg. And then SSA begins to develop the case and
figure out whether there is a benefit offset and what the past-
due benefits might be. From that time, the average is somewhere
between 30 and 90 days.
Mr. Matsui. 30 and 90 days.
Ms. Bovbjerg. The figures that we have say only ten percent
of cases are processed in less than 30 days.
Mr. Matsui. Ten percent is within 30 days and the balance
is--most--okay. But 58 percent of them are between 31 and 80
days and I guess that cannot be broken down. Is that right? Oh,
56. 56 percent. I am sorry. That is a wide number. 31 to 90
days. And you said that the method is manual and it is somewhat
inefficient, I think, in the first part of your testimony.
Ms. Bovbjerg. Yes.
Mr. Matsui. And you are suggesting, I guess, by that
statement that they can improve without additional resources or
if they became more efficient and came up with a better
process. Is that what you are suggesting? Without identifying
it yet because you are still in your study.
Ms. Bovbjerg. Well, there are some things that are within
the agency's control in this process and some things that are
not. And I know earlier Chairman Shaw mentioned the workers'
comp program. Waiting to figure out what kinds of workers'
compensation benefits people may have applied for and received
is not really within the agency's control and that can take a
long time. There are other things that could be done
differently, but it will take time and resources to do that.
Now whether the resources are new resources, as you
suggest, or whether they are taken from somewhere else, we have
not done any work on that. But there are the many manual steps
and there is a lot of opportunity for error. The process takes
time. The ALJs can take a long time to review cases and, as I
believe Mr. Collins pointed out, it depends on how complex the
case may be and whether it is a fee agreement or a fee
petition. Petitions might still take longer, but SSA could
improve their information systems to help eliminate the manual
steps and streamline the process.
How complex that might be depends on the approach that SSA
takes and what other things, what other priorities, are
competing for systems resources.
Mr. Matsui. I think it was Mr. McCrery that raised the
issue of a check to both the attorney and the claimant. Is that
something that you looked into or is that just purely a
discretionary matter for us to make?
Ms. Bovbjerg. Well, we know that people are thinking about
it and we did ask about it when we talked to attorneys.
Mr. Matsui. Right.
Ms. Bovbjerg. And we talked to people at SSA about issuing
joint checks. Our understanding of this is that you would have
the single check made out to both parties, sent to the
attorney, the attorney would deposit it in an escrow account
and then withhold their attorney fee but pay the beneficiary
his/her share. I know that attorneys expressed a view to us
that because the beneficiaries do get paid more quickly, the
attorneys thought that this could speed up their payment.
We did hear, however, that it may, in fact, delay the
payment to the beneficiary. So there is the other side. Whether
or not this is a good idea, we cannot say, but that SSA may not
issue the check as quickly as they would to the beneficiary
because they do need to be sure that it is accurate. They do
have some recourse with beneficiaries that they do not always
have with attorneys. So that might delay the joint check.
And whether the attorney sends the dollars to the
beneficiary right away, you know, SSA loses some control there.
SSA cannot fulfill its responsibility to make sure the
beneficiary is paid.
Mr. Matsui. If I could just ask--I know my time has run--
Chairman Shaw. It does not sound like SSA is really
concerned--
Ms. Bovbjerg. Well, there are some administrative issues
for them as well in doing something like this.
Mr. Matsui. What would make SSA have to delay for purposes
beyond their control if they just made one check out? I mean
after calculating all the offsets and everything, that is when
they decide what the attorneys' fees are, in any event, so you
get that gross amount, and they send that check out. I do not
know what--what could result in a delay?
Ms. Bovbjerg. Well, part of the problem is a systems
problem. The system that they tell to pay the beneficiary does
not have the attorney fee capability in it.
Chairman Shaw. Are we talking about a computer program?
Mr. Matsui. Yeah, it sounds like it.
Ms. Bovbjerg. That is part of it.
Mr. Matsui. But I think that could be fixed? Can it? I mean
computers, I mean--
Ms. Bovbjerg. Things can be fixed, but they will take time.
There are separate systems involved.
Mr. Matsui. We can implement the legislation, you know,
give them that time, you know, implement it, months, whatever
it is. That does not seem to be a real problem. Now in terms of
the--we can put a provision, I guess, or, you know, maybe SSA
can have regulations, and if the attorney does not, upon
receipt of the check, does not disburse the check to the
claimant within ``x'' number of days or hours even, you know,
that person could be barred from bringing cases before SSA for
a year or two years or a hundred years or whatever it may be.
So there are penalties that you can put to the attorney to make
sure--besides an attorney can be, you know, if the attorney
takes the money and runs away with it, there is even more
severe penalties.
And so it would seem to me that there are some built-in
safeguards in terms of the speedy effort to put it in the trust
account and then disburse it immediately, particularly with
electronic transfer.
Ms. Bovbjerg. You are correct. None of these things is
insurmountable. They are just there.
Mr. Matsui. Yeah. That is why I mean it is so hard to deal
with this issue. It seems like there is some--not with you--but
there has been so much resistance in terms of, you know,
something pretty simple all of a sudden becomes so complex and
then we find out it is a computer problem--I do not know--or
software problem. But I do not know. I mean I cannot see why we
cannot figure this one out. I mean this is pretty simple to me,
but maybe it is beyond my ability to understand. But thank you.
I appreciate your testimony and look forward to the balance of
it as well.
Ms. Bovbjerg. Thank you.
Chairman Shaw. Mr. Collins.
Mr. Collins. You heard the question I asked Mr. Taylor
about the time of processing the claims. Have ya'll done any
type of study as to how long it takes to process claims with
attorneys involved versus claims with non-attorneys?
Ms. Bovbjerg. We have not done exactly that. We did do some
work for you on looking at whether attorneys were delaying the
process by not showing up or not providing the information on
time, whether they were lengthening the time it took to reach a
decision on a case. And we found that, anecdotally, people
think, particularly some ALJs, that this is true. We simply
could find no documentation of that. It is just not the kind of
record that is kept in the files.
We did speak to some attorneys who said that it was not
worth it to them to delay because they were not being paid
enough to begin with. So we could see that there were at least
two sides to this issue. What the Office of Hearings and
Appeals staff did say to us was that they thought that there
were other things that caused delay: they identified the open
record, that you can always add more information and more
evidence to a case, and the fact that frequently the Office of
Hearings and Appeals is asked to develop the case, that the
attorneys do not do very much of that, and they are asked to go
out and get the medical information. So there are many things
that could contribute to the length of time that it takes.
Mr. Collins. But there was no documentation by the ALJs as
to delay?
Ms. Bovbjerg. No. We heard talk about it. One of the things
we did report back is that there are means by which ALJs can
sanction attorneys and that those means were not really being
used. They can deny them their fee, for example, if they think
that they really have not done a good job. At the time of that
report, there were new standards of conduct that came out for
attorneys that the ALJs were looking forward to, and we have
not gone back to look and see how effective they have been.
Mr. Collins. Okay. Well, asking the attorneys is like
asking the fox to guard the hen house.
Ms. Bovbjerg. We have to talk to both sides.
Chairman Shaw. You are surrounded, Collins. [Laughter.]
Mr. Matsui. Hey, I am with you.
Mr. Collins. I am packing; are you? Oh, no, you know, I do,
I am very much more concerned about the applicant and their
receiving their benefits versus the attorney and the attorney
receiving his or her fee. Usually it is the case of the
applicant has much more need than the attorney has. But we
appreciate your coming today and thanks for your testimony.
Ms. Bovbjerg. Thank you, sir.
Chairman Shaw. Mr. Hulshof.
Mr. Hulshof. Thank you, Mr. Chairman. Ms. Bovbjerg, in the
figure two and your chart that Mr. Matsui referred to, does
that processing time include delays by the ALJ? You mentioned
at the bottom of page nine that it can take months for an ALJ
to review and approve fee petitions. Is that also included in
your chart?
Ms. Bovbjerg. Only fee agreement cases are included in the
chart; no ALJ time or delays associated with review and
approval of fee petitions are included in the chart.
Mr. Hulshof. Also it is interesting to note on the top of
page ten that sometimes--you mention competing work priorities
and, in particular, with the Senior Citizens Freedom to Work
Act of 2000, which, of course, was taking the earnings limit
off 65 to 69, and then SSA redirected the work of a substantial
number of processing technicians to handle that workload
increase. I think everybody agrees that was a fairly unique
situation that we are not likely to see again.
But let me just ask you regarding this legislation and the
30 day period when, in your view, should the clock start
ticking to measure SSA's processing time?
Ms. Bovbjerg. I think it depends on what you want to
achieve with the time limit. A 30-day limit based on the data
here--now I know that Mr. Taylor was using other data suggests
that they will only get their fee in ten percent of the cases.
A lot of the cases will not be done faster if workers' comp or
something like that is the problem. If you want to think about
getting SSA to change things that are under its control, I do
not know if the 30 day limit is the right one because it is so
dramatically different from what is happening right now and it
is binary. It is on/off. You either get the fee or you do not.
So if SSA does not think it can even get close to the 30 days,
there may not be an incentive to improve.
Mr. Hulshof. I asked of Mr. Taylor the possibility of
withholding attorneys' fees in SSI cases. Can you generalize
for me what issues may be associated with expanding withholding
of attorneys' fees to SSI cases?
Ms. Bovbjerg. Yes, I can. We did talk to a number of people
who are involved in some way in the SSI program, attorneys,
advocates, people at SSA, and we found that some believe that
because SSI claimants are by definition low income that you
should not withhold attorney fees for the past-due benefits
because that makes their situation worse.
There are others who think that if you extend the
withholding to the SSI program, that you will increase
representation among SSI claimants. Right now, the figures that
we got from Social Security suggest that representation is
about 50 percent for SSI claimants, whereas it is around 70
percent for DI claimants. I think that one of the things to
think about and I hate to keep bringing this up, but you would
have to think about how long it would take to implement that
change because the SSI system, which is a different one than
the Title II system, is not set up to withhold attorney fees.
Mr. Hulshof. As someone who started his legal career
actually in the public defender system, which is, again,
representing indigent cases, is it your belief that the sources
of low cost legal representation or free legal representation
for SSI claimants, has the availability of those services gone
up or gone down over the last several years?
Ms. Bovbjerg. I do not know the answer to that question.
You can think about this as being either a loss to them if you
withhold attorney fees, that instead of getting $5,000 in past-
due benefits, they get three something, or you can think that
if attorney representation improves claimants' chances of
reaching a favorable decision, then they are getting 3,000
something that they might not have had otherwise. It is
difficult to know what effect representation has on favorable
decisions. There is some evidence that something like 60
percent with attorneys get favorable decisions versus about
half that for those without attorneys. But you do not know to
what extent there is cream skimming in who accepts what client.
Mr. Hulshof. Thank you, ma'am.
Chairman Shaw. Thank you.
Ms. Bovbjerg. Thank you.
Mr. Collins. Are you a lawyer, Ms. Bovbjerg?
Ms. Bovbjerg. I am not a lawyer.
Mr. Collins. Great. [Laughter.]
Ms. Bovbjerg. You could tell.
Chairman Shaw. The final panel--and I have been told that
we are going to have a vote on the floor in about ten minutes
so we are going to try to at least get well into the testimony
of this next panel before we are called out of here--Nancy
Shor, who is Executive Director of the National Organization
for Social Security Claimants from Midland Park, New Jersey;
Lyle Lieberman, who is either in my district or close to it, is
a Social Security practitioner, Law Offices of Lieberman and--
Mr. Lieberman. Gutierrez.
Chairman Shaw. Okay. Offices in Miami, Florida, and I have
also been told he has got offices in Fort Lauderdale, Boca
Raton and West Palm Beach, all of which are in my district;
Jenny Kaufmann, staff attorney of the National Senior Citizens
Law Center; and Marty Ford, who is co-chair of the Social
Security Task Force Consortium for Citizens with Disabilities.
Again, we have your written testimony and you all may proceed
as you see fit. Ms. Shor.
STATEMENT OF NANCY G. SHOR, EXECUTIVE DIRECTOR, NATIONAL
ORGANIZATION OF SOCIAL SECURITY CLAIMANTS' REPRESENTATIVES,
MIDLAND PARK, NEW JERSEY
Ms. Shor. Thank you, Chairman Shaw. As executive director
for the National Organization of Social Security Claimants'
Representatives, which we for obvious reasons refer to as
NOSSCR, I thank you very much for the opportunity to speak
today at this important hearing. The issues you are discussing
this afternoon are of great importance to claimants, to
beneficiaries, and to those whom they choose to represent them.
By way of background, NOSSCR is an association of attorneys
and non-attorneys who represent Social Security and SSI
claimants in proceedings before the Social Security
Administration and in federal court. Our current membership of
3,400 is committed to the highest quality legal representation
for claimants in an increasingly complicated disability
determination process.
My name is Nancy Shor. It has been my privilege to serve as
executive director of NOSSCR since its inception 20 years ago.
For three years prior to that, I represented Social Security
claimants on Cape Cod.
I want to turn first to questions about the user fee. The
new 6.3 percent assessment on attorney fees paid by the
administration is now, as you know, in effect. To explain it,
to illustrate, if an attorney is authorized a fee of $500 for
legal services, the amount of the check that Social Security
sends to that attorney is now $468.50. If the attorney is
authorized a fee of $4,000, the amount of the check that SSA
sends is $3,748.
As we did when the user fee was enacted, we continue to
oppose it. We fail to understand the rationale for why a
service that the statute has required SSA to perform for more
than 35 years at no charge now has a charge. The balance that
the attorneys' fee statute at Section 42 of the Code has
traditionally struck is that on the one hand the amount of the
attorney fee is regulated by Social Security, while on the
other hand fee payment by the agency is assured.
This balance has now gone awry. We do not understand how
the 6.3 percent amount was derived as the cost of providing a
check or why the cost of providing a check varies with the
amount of the check. Even more discouraging to our members is
the statement by the commissioner that there is no what I call
``closed circuit,'' that is, revenues generated by the user fee
do not return to the components inside Social Security that
process fees to enable them to provide any better service.
In a March 3 letter that you, Chairman Shaw, received from
Social Security, the following statement was made: When we
proposed legislation to improve the attorney fee payment
process--I underscore improve--we included a provision to
deposit the funds raised as a result of the 6.3 percent user
fee into our Limitation on Administrative Expenses account. We
intended to use the funds raised by the fee to improve the
administration of the payment process. However, when Congress
passed the provision establishing the user fee, it did not
provide for the fees to be deposited in the LAE account.
Therefore, we are not receiving additional resources, which
hinders our ability to make additional significant improvements
on our current performance.
Since the amount of the user fee is not tied to the cost of
writing a check and user fee funds do not return to the check
writing components at SSA, it seems clear that this user fee is
simply a new tax on attorneys' fees, which we oppose as unfair.
We believe that if a user fee is to be assessed, it should be
kept at no more than $25 per check, a figure that appears
eminently reasonable in light of SSA's statements that the cost
of writing and mailing an individual benefit check is 42 cents.
Second, I would like to briefly touch on a way to improve
access for SSI claimants to legal representation. And the
question is: why is it that a Social Security disability
claimant can usually find an attorney, but in many parts of the
country, a similarly situated SSI claimant cannot? What is the
reason according to SSA's data for fiscal year 1999, 83.4
percent of Title II claimants were represented at the OHA level
while only 57.1 percent of Title XVI claimants were
represented?
We maintain a large part of the answer lies with the
difference between the Social Security and SSI programs with
regard to payment of attorneys' fees. In both programs, the
amount of fees is regulated and ultimately set by SSA. But only
in the Social Security program is the fee paid directly by SSA
out of the claimant's past due benefits.
In the SSI program, the successful claimant is responsible
for payment of the approved fee, but unfortunately often does
not make that payment. The concern that we have is as a result
of that history, many private attorneys will decline to
represent SSI claimants with meritorious cases.
This is particularly true in light of the revenue decrease
engendered by the user fee. In light of the revenue decrease
with their Social Security cases, many attorneys who used to
take SSI cases on a pro bono basis now feel they can no longer
continue to do so. Many attorneys who used to represent SSI
claimants with the knowledge that some cases would produce no
fees now feel they can no longer afford to do so.
I want to be clear that we wholeheartedly support all the
existing services, representation services from legal services,
from attorneys working on a pro bono basis, from state-funded
advocacy programs, from any and every source that provides
legal representation to claimants. We want to be the lawyers of
last resort. We want to be there for the SSI claimant who
cannot find free representation from any other source. To
assist these individuals, we advocate extension of the fee
payment process used in Social Security cases to SSI claims.
We know from the referral service that NOSSCR maintains we
get dozens of calls a day from claimants with SSI cases all
over the country who are not able to find any free legal help
and we are often not able to find them a private attorney who
is willing to take the case because of the uncertainty of
payment.
An additional hurdle has been a consequence of the
installment payments contained in the Personal Responsibility
and Work Opportunity Reconciliation Act of 1996, which directs
Social Security to issue past due SSI payments in installments
if they are over a certain amount, approximately $5,500.
There is a provision, a statutory provision, that the first
installment of $5,500 will be increased when the recipient can
document unpaid shelter, food and medical bills. We suggest
that one approach to the problem is to add the amount of the
authorized attorney fees to the list of items for which the
first installment payment may be increased.
Third, I would like to touch on the need for an
inflationary adjustment to the current attorneys' fee cap. The
attorney fee statute was significantly amended in 1989 to
create a fee agreement system which provides that the attorney
and client can enter into a streamlined attorney fee world
where fees are capped at 25 percent or $4,000, whichever is
lower.
Authority was given to the commissioner as part of that
statute to adjust that $4,000 cap for cost of living
adjustments given to beneficiaries over the years. Ten years
have passed with no adjustment. The consequence is that the
number of cases being processed as fee petition cases could be
decreased. Those could be processed as fee agreement cases
which is much less expensive for the administration, but the
fee petition cases have started to go up because attorneys have
more time in on the cases than the $4,000 ceiling will
compensate them for.
We are not advocating the increase in fees. We are
advocating an increase in use of the fee agreement system and
if the COLA adjustment were made to the fee agreement cap, we
maintain the number of fee petitions would be decreased.
Chairman Shaw. Okay. Ms. Shor, you are going to have to
wrap up now. You have gone way over the time that we have set
aside.
Ms. Shor. We are very enthusiastic about the bill that you
have introduced that links performance by Social Security to
the payment of the user fee. As I am sure you know from the
cascade of letters that your office receives, attorneys
currently have absolutely no mechanism to use to avail
themselves of when the fee payments are not made and we
certainly support efforts to make a linkage, but always--and
let me be clear--always the beneficiary is paid first. Nobody
has any sort of notion that the attorneys would get paid first.
Thank you very much.
Chairman Shaw. Thank you.
[The prepared statement follows:]
Statement of Nancy G. Shor, Executive Director, National Organization
of Social Security Claimants' Representatives, Midland Park, New Jersey
As Executive Director for the National Organization of
Social Security Claimants' Representatives, I thank you for the
opportunity to speak today at this important hearing. The
issues you are discussing this afternoon are of great
importance to claimants, to beneficiaries, and to those whom
they choose to represent them. As requested by the
Subcommittee, I state that neither NOSSCR nor I have received
any government grants or contracts in the past two years. A
copy of my curriculum vitae is attached.
NOSSCR is an association of attorneys and non-attorneys who
represent Social Security and SSI claimants in proceedings
before the Social Security Administration and in federal court.
Our current membership of 3,400 is committed to the highest
quality legal representation for claimants.
My name is Nancy Shor. It has been my privilege to serve as
Executive Director of NOSSCR since its inception more than
twenty years ago. For three years prior to that, I represented
Social Security claimants in Massachusetts.
Rationalize the Amount of the ``User Fee''
The new 6.3% assessment on attorneys' fees paid by the
Administration is now in effect. To illustrate, if an attorney
is authorized a fee of $500.00 for legal services, the amount
of the check that SSA sends is $468.50. If an attorney is
authorized a fee of $4,000.00, the amount of the check that SSA
sends is $3,748.00.
As we did when the user fee was enacted, we continue to
oppose it. We fail to understand the rationale for why a
service that the statute has required SSA to perform for more
than thirty-five years at no charge now has a charge. The
balance that the attorneys' fee statute at 42 U.S.C. has
traditionally struck is that, on the one hand, the amount of
the attorney's fee is regulated by SSA while on the other, fee
payment by the agency is assured. This balance is now awry.
We believe that no case has been made to explain how the
6.3% amount was derived as the cost of providing a check or why
the cost of providing a check varies with the amount of the
check.
Even more discouraging to us is the statement of the
Commissioner that there is no ``closed circuit,'' that is, the
revenues generated by the ``user fee'' do not return to the
offices that process fees to enable them to provide better
service. In his March 3, 2000 letter to Chairman Shaw, Charles
H. Mullen, Associate Commissioner of SSA's Office of Public
Inquiries, states, ``[W]hen we proposed legislation to improve
the attorney fee payment process, we included a provision to
deposit the funds raised as a result of the 6.3 percent user
fee into our Limitation on Administrative Expenses (LAE)
account. We intended to use the funds raised by the fee to
improve the administration of the payment process. However,
when Congress passed the provision establishing the user fee,
it did not provide for the fees to be deposited in the LAE
account. Therefore, we are not receiving additional resources,
which hinders our ability to make additional significant
improvements on our current performance.''
Since the amount of the ``user fee'' is not tied to the
cost of writing a check, and the ``user fee'' funds do not
return to the check-writing component at SSA, then this ``user
fee'' is clearly and simply a new ``tax'' on attorneys' fees.
We oppose it as unfair. We believe that, if a ``user fee'' is
to be assessed, it should be capped at no more than $25.00 per
check, a figure that appears eminently reasonable in light of
SSA's statements that the cost of writing and mailing an
individual benefit check is forty-two cents.
Improve Claimants' Access to Assistance with SSA's Complex
System
Why is it that a Social Security claimant with a disability
case usually can find an attorney, but in many parts of the
country, an SSI claimant with an identical disability case
cannot? What is the reason that, according to SSA's data for FY
1999, 83.4% of Title II claimants were represented at the OHA
level, while only 57.1 % of Title XVI claimants were
represented?
A large part of the answer lies with the difference between
the Social Security and the SSI programs with regard to payment
of attorneys' fees. In both programs, the amount of the
attorneys' fees is regulated and ultimately set by SSA. But
only in the Social Security program is the fee paid directly by
SSA out of the claimant's past-due benefits. In the SSI
program, the successful claimant is responsible for payment of
the approved fee. Unfortunately many do not pay fees.
Our concern lies with those SSI claimants who want to be
represented but who at present are unable to hire a lawyer, not
because of the lack of merit of their claim but because of the
lawyer's concern about the uncertainty of eventual fee payment.
We recently surveyed our members and learned that one no
doubt unintended consequence of the new ``user fee'' is that
many attorneys are changing their practice with regard to SSI
cases. In light of the revenue decrease with their Social
Security cases, many attorneys who used to take SSI cases on a
pro bono basis now feel they can no longer afford to do so.
Many attorneys who used to represent SSI claimants with the
knowledge that some cases would produce no fees now feel they
can no longer afford to do so.
We wholeheartedly support all of those currently providing
representation to SSI claimants, including the legal services
programs, the attorneys who accept SSI cases on a pro bono
basis, the state-funded advocacy programs, and the state-
created fee payment systems for interim assistance recipients.
All of these are invaluable resources that should be preserved
or extended. But we know that many SSI claimants who want to be
represented are not able to find it through these sources. To
assist these individuals, we advocate the extension of the fee
payment process used in Social Security claims to SSI claims.
Our intention is to provide a supplement to the existing
sources of representation.
Another hurdle for an attorney who is asked to take an SSI
case lies with the recent statutory provisions for installment
payments of large retroactive SSI benefits that result in
multiple smaller payments for beneficiaries. At a minimum, we
recommend that a change be made in the installment payment
provision enacted in the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996. Currently, when an SSI
recipient's past-due benefits exceed the amount of one year's
benefits, the agency pays the past-due benefits in
installments, at six-month intervals. The first installment is
capped at an amount equal to one year's benefits; there is a
statutory provision that the agency will increase the amount of
the first installment when the recipient can document unpaid
shelter, food, and medical bills. We advocate that the amount
of the authorized attorney's fee be added to the list of items
for which the first installment may be increased.
Inflationary Adjustment to the Attorneys' Fee Cap
The attorneys' fee statute was significantly amended in
1989 to create a new process known as the ``fee agreement.''
The ``fee agreement'' was enacted as an alternative to the
long-standing ``fee petition'' system, which was seen as an
expensive use of limited administrative time. The ``fee
agreement'' process has proved to be popular with
representatives.
In 1990, Congress created the streamlined fee agreement
process, and set a cap of $4,000.00, with the following, ``The
Secretary may from time to time increase the dollar amount
under clause (ii)(II) to the extent that the rate of increase
in such amount, as determined over the period since January 1,
1991, does not at any time exceed the rate of increase in
primary insurance amounts under section 215(i) since such date.
The Secretary shall publish any such increased amount in the
Federal Register.'' 42 U.S.A. Sec. 406 (a)(2)(A)(iii). Ten
years have passed with no adjustment. For this reason, use of
the ``fee agreement'' process has begun to decrease, and at the
same time, the number of fee petitions filed has started to
rise. The time has come for an adjustment in the cap, to return
the effectiveness of the statute to what Congress intended when
enacting it.
We are not advocating an increase in fees. Currently, the
representative who wishes to charge a fee between $4,000.00 and
$5,000.00 files a fee petition and generally is authorized a
fee in the amount requested. But it often takes the agency
adjudicators upwards of a year to act on a fee petition and
issue the fee authorization. Adjusting the fee agreement cap
would reduce some of this fee petition workload for the agency.
Adjusting the cap would of course in no way diminish the
current fee agreement provision that an aggrieved claimant can
protest the amount of the fee.
Improve Efficiency of SSA's Attorney Fee Payment System
Attorneys have long complained about the length of time the
Social Security Administration takes to pay their attorneys'
fees. When either the fee setting or fee-payment processes are
unreasonably delayed, attorneys who have earned these fees and
who rely on their receipt find themselves in financial
distress. Many have been compelled to borrow money; others are
deciding to leave the practice altogether. Short of filing
mandamus actions in federal court and bombarding their Members
of Congress with requests for help, they presently have no
recourse. Our members report that the slowdown in payment
processing happens regularly each year during the months of
November and December; they report that the number of fee
payments diminishes, sometimes to none. (In response to our
FOIA request for the number of attorney's fee checks issued
each month during 1998 and 1999, we received the following
response, ``We are unable to comply with your request since we
do not maintain the data you requested.'').
One reason for the attorneys' dismay at the enactment last
December of the 6.3% ``user fee'' was that there was no
linkage, express or implied, to improved service. We believe
that it is eminently fair to tie assessment of any ``user fee''
to a performance standard on the agency's part. We suggest that
the agency be permitted to assess any ``user fee'' only if the
attorney's fee payment is made within 30 days of certification
of payment of past-due benefits to the claimant.
The pace of attorneys' fee payments has increased somewhat
since the first of this year. We believe that this is due in
part to the interest in this matter that Chairman Shaw and this
Subcommittee have expressed to the agency. It is also due to
another provision in the Ticket to Work and Work Incentives
Improvement Act that eliminated an unnecessary waiting period
from SSA's effectuating procedures for cases in which the
attorney used the fee agreement process. The faster payments
seen earlier this year demonstrate that the agency is capable
of meeting the proposed 30-day deadline.
Another way to enhance SSA's efficiency in fee payments and
reduce its administrative expenses would be to implement a
joint check system where payments are not electronically
transmitted. Many comparable programs in both the public and
private sectors utilize joint checks, that is, a single check
payable jointly to the claimant and the attorney. This includes
most state workers' compensation programs and virtually all
personal injury cases. Upon the endorsement of both the client
and the attorney, the proceeds of the check are placed in an
escrow account and then apportioned according to the statute
and regulations (public sector) or the litigants' agreement
(private sector). Where claimants' benefits are electronically
transmitted, we believe it only fair and equally efficient to
require that the attorneys' fee be electronically transmitted
at the same time. If the agency were to determine that the cost
of administering a program of joint checks is significantly
less expensive than the current two-check system, we would
support its use.
In conclusion, we thank the Chair and all the members of
this Subcommittee for your interest in these issues. I would be
pleased to respond to any questions you may have.
Chairman Shaw. Mr. Lieberman. And what will happen you will
go ahead and give us your remarks and then we are going to have
to recess to go make this vote and then we will come back and
try to wrap up.
STATEMENT OF LYLE D. LIEBERMAN, SOCIAL SECURITY PRACTITIONER,
LIEBERMAN & GUTIERREZ, P.A., MIAMI, FLORIDA
Mr. Lieberman. Thank you, Chairman Shaw, and good afternoon
to you and members of the committee. My name is Lyle Lieberman.
I am an attorney in private practice with the firm of Lieberman
and Gutierrez in Miami, Florida, and represent Social Security
claimants primarily from Dade and Broward counties, but also
Palm Beach County, and I appear frequently at administrative
hearings at the Social Security Administration's Office of
Hearings and Appeals in Fort Lauderdale, Miami and West Palm
Beach.
I hope that my observations will be useful to you today.
They come from my tenure as administrative law judge with the
Social Security Administration's Office of Hearings and
Appeals, from my 28 years of private practice in representing
Social Security claimants, and indeed in my 42 years of private
practice and being proud to be a member of both the Illinois
and Florida bars.
From my tenure as an ALJ, I learned that good legal
advocacy is a boon to the decision-making process. Good
advocates develop and marshal the evidence and present
arguments at a hearing. From my many years in private practice,
I have learned that good advocacy is much more. It includes a
great deal of time in speaking with potential clients to
explain how the Social Security process operates and what to
expect in their cases, other benefits and community services
which might be available to them, and in some instances
informing them why they are not going to be found eligible for
benefits notwithstanding their particular impairments.
I also answer many questions and provide information that
my clients would otherwise try to seek from the Social Security
Administration, and as you know from previous hearings, the
amount of time that SSA personnel spend with individual
claimants and their questions has become very limited.
I would like to just briefly address the new user fee which
Ms. Shor has discussed. This charge we have now just begun to
feel its impact because the agency did not start it until
February 1. The figure of 6.3 percent may not seem a lot and
indeed when I first saw it, I did not think it was that much
until we realized that it translates in the reduction of our
net revenue of about 20 percent because I cannot reduce
payments to anyone of my staff including our landlord, our
publisher, the legal documents, the post office; no one except
myself.
And my colleagues who practice in this field and I are
certainly very distressed by this user fee because it simply
appears to be a tax. I have never seen an explanation of why it
costs $250 for the agency to write a check when the attorney's
authorized fee is $4,000. The Miami office of one of our
private payroll services charges $3 to write each employee's
payroll check for an office with ten employees which includes
calculating and processing the appropriate payroll deductions.
I would think that this service is quite comparable to SSA's in
writing attorneys' fee checks and if there must be a charge for
SSA's costs in writing the check, I do not understand why the
fee should be more than the $3 charged by this private service.
I also think there should be some performance required of
SSA. Over the years, I have generally received payments from
SSA more than six months after the award notices were issued. I
have experienced annual slowdowns from the agency when no
checks were received for months. Recently, I am pleased to
report that this has improved somewhat, but there is no way to
determine that this improvement will continue, and it is
nothing more than temporary in many instances.
The requirement that SSA may not assess the user fee until
the attorney's fee is paid within 30 days of a certification
for payment of retroactive benefits to the claimant would no
doubt provide SSA with a necessary inducement to ensure proper
payment. This payment would be made 30 days after the
certification was made that the claimant should be paid.
I think it is only fair that once the representation for
the client has been completed and all of SSA's other
requirements are complied with, that prompt payment should be
utilized. The fee agreement process is a good one. Compared
with the fee petition process, it is certainly more
streamlined. It saves time for the administration. It saves
time for the lawyers and indeed statistics show that most
lawyers utilize this process. For many years before 1990, the
only methodology was the fee petition process and it was very
lengthy and many times the fee was not paid for at least a year
or more.
But I do not use the fee agreement process as often as I
once did because of the current cap of $4,000. I am now filing
more fee petitions, which many other attorneys are doing, which
SSA is extremely slow in processing, particularly at levels
below the ALJ hearing level and the attorney fee branch.
The cost of living cap has not changed in ten years, but I
would suggest that the cap and the statute be increased to
$5,000. The result would be that many of the fee petitions
currently being submitted would disappear and the attorneys
would choose to use the streamlined fee agreement process
instead. And indeed most of the cases under the fee agreement
process would be below the $5,000 figure anyway.
And finally with regard to SSI claimants, my office
receives many calls from claimants with SSI cases. Because
there is no direct withholding and direct payment of attorneys'
fees, with great reluctance, I do not accept SSI claimants as
clients unless they have concurrent cases with Title II
benefits available or when, in a lot of situations, I just
cannot turn these people away.
The SSI cases that our office handles constitute all of our
pro bono efforts that I and my associates do. And we wish we
could do more. We get referrals from Legal Aid Services because
they are so burdened with cases and do not have the support to
do them. They ask us particularly if we have a particular
interest, which I do, in cases that involve lupus or multiple
sclerosis, and we will handle those cases on a pro bono basis.
But we would handle SSI cases if there was a fee petition
or withholding in place once we learned that Legal Aid could
not handle those cases. Thank you for holding this hearing
today and providing me with the opportunity to testify and I
would be happy to answer any questions the chairman has.
Chairman Shaw. Thank you, Mr. Lieberman.
[The prepared statement follows:]
Statement of Lyle D. Lieberman, Social Security Practitioner, Lieberman
& Gutierrez, P.A., Miami, Florida
Good morning. My name is Lyle Lieberman. I am an attorney
in private practice with the firm of Lieberman & Gutierrez in
Miami, Florida. I represent Social Security claimants primarily
from Dade and Broward Counties. I appear frequently at
administrative hearings at the Social Security Administration's
Offices of Hearings and Appeals in Fort Lauderdale and in
Miami.
Thank you very much for the opportunity to appear before
you today. I hope that my observations will be useful to you.
They come from my tenure as an Administrative Law Judge with
the Social Security Administration's Office of Hearings and
Appeals and from my 28 years of private practice in
representing Social Security claimants. To comply with the rule
referenced in the Subcommittee's invitation, I have provided a
copy of my curriculum vitae with this statement. I have
received no government grants or contracts in the past two
years.
Role of Representation
From my tenure as an ALJ, I learned that good legal
advocacy is a boon to the decision-making process. Good
advocates develop and marshal the evidence and present
arguments at hearing. From my many years in private practice, I
have learned that good advocacy is much more. It includes a
great deal of time in speaking with potential clients to
explain what how the Social Security process operates and what
to expect in their cases; other benefits and community services
might be available to them; and in some instances, informing
them why they are not going to be found eligible for benefits,
notwithstanding their particular impairments. I also answer
many questions and provide information that my clients would
otherwise try to seek from the Social Security Administration.
As you know from previous hearings, the amount of time that SSA
personnel spend with individual claimants and their questions
has become very limited.
The New User Fee
A charge of 6.3% of the amount of the attorney's fee was
enacted last December. We have just begun to see the impact of
this new fee, because the agency did not begin to apply it
until February 1. A figure of 6.3% may seem not significant to
you. But in private practice, a reduction of 6.3% of our gross
revenue translates into an almost 20% reduction in our net
revenue. This is because I cannot reduce payments to anyone,
including my landlord, my legal publisher, the post office, or
my office staff by 6.3%--no one except myself.
My colleagues who practice in this field and I are
certainly very distressed by this user fee. It seems to us to
be simply a tax. I have never seen an explanation of why it
costs $252.00 for the agency to write a check when the
attorney's authorized fee is $4,000. I cannot fathom this. The
Miami office of a private payroll services company charges
approximately $3.00 to write each employee's payroll check for
an office with ten employees (this includes calculating and
processing the appropriate payroll deductions). I would think
that this service is quite comparable to SSA's in writing
attorney's fee checks. If there must be a charge for SSA's cost
in writing the check, I do not understand why any fee charged
should be more than $3.00.
I also think that there should be some performance required
of SSA. Over the years, I have generally received payments of
my fees from SSA more than six months after the Award Notices
were issued. I have experienced annual slow-downs from the
agency when I received no checks at all for several months.
Recently I am pleased to report that this has improved
somewhat. But I have no confidence at all that this improvement
will continue, and that it is nothing more than temporary. A
requirement that SSA may not assess any user fee unless the
attorney's fee is paid within thirty days of the certification
for payment of retroactive benefits to the claimant would no
doubt provide SSA with the necessary inducement to ensure
prompt payment. I think it is only fair that once I have
finished the representation for my client and complied with
SSA's fee approval process that I should be able to count on
prompt payment of the authorized fee.
Fee Agreement Process
The fee agreement process is a good one. Compared with the
fee petition process, it is certainly more streamlined. The fee
agreement saves time for the Administration and saves time for
lawyers. It preserves the opportunity for claimants to object
if they feel they have been overcharged.
But I do not use the fee agreement process as often as I
once did, because of the current fee cap of $4,000. I am now
filing more fee petitions, which SSA is extremely slow in
processing, particularly at the levels below the administrative
hearing and at the Attorney Fee Branch. The fee cap has not
changed in ten years; I would suggest that the cap in the
statute be increased to $5,000. The result would be that many
of the fee petitions currently being submitted would disappear;
the attorneys would choose to use the streamlined fee agreement
process instead.
Representation for SSI Claimants
My office receives many calls from claimants with SSI
cases. But there is no withholding and direct payment of
attorneys' fees in SSI cases. This is the reason that, with
great reluctance, I can not accept SSI claimants as clients,
except those who have a concurrent Social Security claim (where
I will receive direct payment for my services on the Social
Security disability portion of the claim), or when it is a
person whom I just can't turn away. My experience has taught me
that I am not likely to be paid for my time. I am not able to
expand my pro bono commitment, especially in light of the
reduced revenue caused by the user fee.
If a fee payment procedure were in place, could I accept
the cases from the many SSI claimants who call my office? My
answer is yes, if the person were not able to obtain free legal
representation from the legal services programs in my area.
Thank you for holding this hearing today and for providing
me with the opportunity to testify. I would be pleased to
answer any questions you might have.
Chairman Shaw. We have got about five minutes to make this
vote so we will stand in recess for about--we should be gone
about ten or 15 minutes. Thank you.
[Recess.]
Chairman Shaw. Okay. There may be another vote in about ten
or 15 minutes, maybe 20 minutes, so I would like to try to
finish up with ya'll so you will not have to sit around here
waiting on us. We are waiting for Ms. Kaufmann. She is not
here. So we will go to Ms. Ford.
STATEMENT OF MARTY FORD, CO-CHAIR, SOCIAL SECURITY TASK FORCE,
CONSORTIUM FOR CITIZENS WITH DISABILITIES
Ms. Ford. Thank you, Chairman Shaw, and members of the
subcommittee for this opportunity to testify. I am here today
in my role as co-chair of the Social Security Task Force of the
Consortium for Citizens with Disabilities. The CCD Social
Security Task Force urges the subcommittee to support a
statutory change that would allow SSI claimants to voluntarily
enter into an agreement with attorneys for SSA to withhold and
provide direct payment of attorneys' fees from their past due
SSI benefits.
We support such a provision because it will help ensure
that claimants have adequate representation to appeal their
cases. The disability determination and adjudication system is
a complex, multi-level process involving the evaluation of
medical and vocational factors and the process is simply too
complicated for many claimants to navigate on their own.
However, because there is no direct payment of attorneys'
fees in SSI cases, many attorneys are unable to provide
representation in these cases. Since SSI benefits cannot be
attached if the client does not pay, claimants with significant
physical and mental impairments who are in difficult financial
circumstances must often fend for themselves with SSA.
We recognize that there may be reluctance to consider the
withholding of attorneys' fees from SSI claimants who by
definition have extremely low income and assets, if any. It
could be argued that SSI claimants would be better off using
pro bono legal services or relying on legal services attorneys
or protection and advocacy system attorneys to pursue their
claims.
The CCD Social Security Task Force acknowledges these
concerns and we strongly support the valuable service that
these programs provide claimants, but we do not see this
proposal as affecting their efforts in any way. Since legal
services and P&A system resources, as well as the availability
of pro bono legal services, are significantly limited, we
concluded that SSI claimants would benefit from voluntary
access to the attorneys' fee payment system as an additional
resource, especially where they have been unsuccessful in
finding legal assistance elsewhere.
Further, we believe that the potential loss of eligibility
and benefits due to a lack of experienced legal representation
is a far greater harm or burden to the claimant than payment of
reasonable attorneys' fees out of the back benefit.
Given the low income and resources and limited ability of
many SSI claimants to successfully pursue their own claims, we
can see no compelling reason not to create parity in the
payment system, especially since many individuals could be
eligible for SSI, Title II, or both, depending upon when they
apply.
The withholding and direct payment mechanism in the Title
II program has helped to ensure that there is a pool of private
attorneys who are willing and have the expertise to pursue
claimants' cases. We urge you to establish a similar mechanism
in SSI cases to provide these claimants with the same
opportunity to obtain representation and the benefits to which
they are entitled. And we would be happy to work with you to
ensure that issues specific to the SSI population, such as the
repayment of interim benefits, are taken into account in
crafting such a provision. Thank you.
Chairman Shaw. Thank you, Ms. Ford.
[The prepared statement follows:]
Statement of Marty Ford, Co-Chair, Social Security Task Force,
Consortium for Citizens with Disabilities
ON BEHALF OF:
Adapted Physical Activity Council
American Association on Mental Retardation
American Association of University Affiliated Programs
American Network of Community Options and Resources
Association for Persons in Supported Employment
Brain Injury Association
International Association of Psychosocial Rehabilitation
Services
National Alliance for the Mentally Ill
National Association of Developmental Disabilities Councils
NISH
National Mental Health Association
National Organization of Social Security Claimants'
Representatives
Paralyzed Veterans of America
Research Institute for Independent Living
The Arc of the United States
Title II Community AIDS National Network
Chairman Shaw, Congressman Matsui, and Members of the
Subcommittee, thank you for this opportunity to testify about
the collection of attorneys fees in the Social Security
disability programs.
I am Assistant Director of the Governmental Affairs Office
of The Arc of the United States. I am testifying here today in
my role as co-chair of the Social Security Task Force of the
Consortium for Citizens with Disabilities. CCD is a working
coalition of national consumer, advocacy, provider, and
professional organizations working together with and on behalf
of the 54 million children and adults with disabilities and
their families living in the United States. The CCD Social
Security Task Force focuses on disability policy issues and
concerns in the SSI program and the Title II disability
programs.
The CCD Social Security Task Force urges the Subcommittee
to support a statutory change that would allow SSI claimants to
voluntarily enter into an agreement with attorneys for SSA to
withhold and provide direct payment of attorneys fees from
their past due SSI benefits. The CCD Social Security Task Force
supports such a provision because it will help ensure that
claimants have adequate representation to appeal their cases.
The reasons behind the withholding and direct payment of
attorneys' fees in Title II cases apply with equal force to SSI
cases.
The disability determination and adjudication system is a
complex, multi-level process, involving the evaluation of
medical and vocational factors. The process simply is too
complicated for many claimants to navigate on their own. Most
claimants seek representation only after their own efforts to
pursue applications have resulted in denial of their claims.
However, because there is no direct payment of attorneys'
fees in SSI cases, many attorneys are unable to provide
representation in these cases. Since SSI benefits cannot be
attached, an attorney cannot collect a fee from a successful
client if the client has only SSI income and does not pay. Due
to the resulting limited number of attorneys willing to take
SSI cases, claimants with significant physical and mental
impairments who are in difficult financial circumstances are
often left to fend for themselves with SSA.
We recognize that there may be reluctance to consider the
withholding of attorneys' fees from SSI claimants, who, by
definition, have extremely low income and assets, if any. It
could be argued that SSI claimants would be better off using
pro bono legal services or relying on legal services attorneys
or protection and advocacy system attorneys to pursue their
claims.
The CCD Social Security Task Force acknowledges these
concerns. We strongly support the valuable service these
programs provide SSI claimants in offering representation and
do not see this proposal as affecting their efforts in any way.
However, since legal services and P&A system resources, as well
as the availability of pro bono legal services, are
significantly limited, we concluded that SSI claimants would
benefit from voluntary access to the attorneys fee payment
system, as an additional resource, especially where they have
been unsuccessful in finding legal assistance elsewhere.
Further, we believe that the potential loss of eligibility/
benefits due to a lack of experienced legal representation is a
far greater harm or burden to the claimant than the payment of
reasonable attorneys' fees out of the back benefit. Given the
low income and resources and the limited ability of many SSI
claimants to successfully pursue their own claims, we can see
no compelling reason not to create parity in the payment
system, especially since many individuals could be eligible for
SSI, Title II, or both, depending upon when they apply.
The withholding and direct payment mechanism in the Title
II program has helped to ensure that there is a pool of private
attorneys who are willing and have the expertise to pursue
claimants' cases. We urge you to establish a similar mechanism
in SSI cases to provide these claimants with the same
opportunity to obtain representation and the benefits to which
they are entitled.
Chairman Shaw. Ms. Kaufmann.
STATEMENT OF JENNY KAUFMANN, STAFF ATTORNEY, NATIONAL SENIOR
CITIZENS LAW CENTER
Ms. Kaufmann. Thank you, Chairman Shaw. Thank you for
providing me with the opportunity to present the position of
the National Senior Citizens Law Center and SSI advocates
throughout the country on expanding the withholding of
attorneys' fees to SSI claimants.
We are opposed to the elimination of the current protection
for SSI recipients from attorney fee withholding. As a recently
former legal services attorney, I represented SSI claimants and
some SSDI claimants at all stages of the SSA disability appeals
process for more than six years.
I also represented them on other legal issues as well. We
were and I was a one-stop shop for SSI claimants. These clients
represent the most vulnerable members of our society and the
legal problems they encounter are numerous, complex and
invariably tied to their financial situation. The proposal to
withhold attorneys' fees from retroactive SSI awards would
create undue hardship and defeat the very purpose of the SSI
program which is to provide a minimum subsistence level that
falls below the poverty level.
This issue has been considered by Congress in the past and
it has concluded that withholding past due benefits from
financially needy individuals under Title XVI would cause
greater hardship than Title II withholding. This is just as
true today as it has been in the past.
The Social Security Administration would be put in the
untenable position of serving as a collection agent who is
required to automatically place the payment of an attorney fee
debt before legitimate debts, necessary debts, to a landlord,
to a grocer, to a health care provider or even a neighbor who
provided transportation to doctors' appointments and other
places.
Many times my only negotiating tool to delay or waive legal
proceedings was the fact that I could verify with a creditor
that I would not receive a fee for my services. Payments or
loans for food and shelter are the outstanding debts that SSA
requires a claimant to verify under penalty of perjury to avoid
a reduction in SSI benefits. These are the in-kind support
deductions. Often an SSI retroactive award is fully consumed by
the repayment of these necessary debts.
The payment of attorneys' fees when coupled with repayment
of a state interim assistance grant would effectively wipe out
the retroactive award especially the first installment. As an
example, a Virginia claimant who has only waited a year to
obtain SSI benefits normally would be entitled to $6,144 in a
retroactive award if there were no other deductions for in-kind
support or other countable income.
A 25 percent attorney fee would reduce that award to
$4,608. If the claimant also received interim assistance during
this time, which is only $220 a month in the Commonwealth, the
state would be entitled to direct payment of $2,640 leaving
less than $2,000 for a claimant to repay any rent that is owed
to her landlord or any other payments to creditors.
Further complicating the calculation is that at a minimum,
an SSI claimant who does not receive a government subsidized
housing grant must incur a rental liability and verify under
oath that liability to SSA. If they do not, they face a
reduction in their SSI benefits. Arguably, that rental
liability at a minimum must equal the value of the one-third
reduction rule which for fiscal year 2000 is $170.66 or $2,048
a year. Less than $2,000 in a retroactive award is not going to
meet their minimum rental liability to avoid a reduction in
their SSI benefits.
Payment of an attorney fee and repayment of interim
assistance would not allow the SSI claimant to meet that rental
obligation or debt. A vulnerable SSI claimant should not be put
in the predicament of defaulting on rental obligations or other
credit obligations.
There is no evidence that the withholding of attorneys'
fees would increase the availability of representation for SSI
claimants. Other factors go into that decision including the
many income deductions that are associated with SSI benefits
that may reduce the ultimate back award.
It will, however, increase the cost to the SSI claimant who
can now negotiate for lower fees commensurate with their
ability to pay. If SSA collects a set fee, the attorney no
longer needs to consider any other factors in the fee that is
charged. In the absence of solid assurance that SSI attorney
fee withholding will result in significantly greater levels of
representation for SSI claimants, Congress should not take an
action that will eliminate fee negotiation and create hardship
for some of the poorest Americans who will bear the brunt of
increased fees and costs.
We are sympathetic to the concerns of the private bar who
must endure long delays in payment of their hard-earned fees.
But Congress should not correct this in a manner that places
the burden on those least able to shoulder it. There are other
less burdensome methods to do that including assurance that the
attorney fees are timely processed by Social Security.
Chairman Shaw. Thank you.
[The prepared statement follows:]
Statement of Jenny Kaufmann, Staff Attorney, National Senior Citizens
Law Center
Mr. Chairman and Members:
My name is Jenny Kaufmann. Thank you for the opportunity to
present our views to the Committee. The National Senior
Citizens Law Center (NSCLC) works directly with legal services
programs and other agencies across the country, providing
assistance on a broad range of issues that affect the elderly
and disabled poor. The Social Security and SSI programs have
been at the core of our priorities since NSCLC was founded in
1972. I began working at NSCLC a little over a month ago after
serving as the managing attorney of a legal services public
benefits unit for almost six years. I am making this statement
on behalf of NSCLC and other SSI advocates.
We wish to express our opposition to a proposal that would
abolish the existing protection for SSI recipients and
authorize the withholding of attorneys fees from retroactive
awards of SSI benefits. This proposal would create undue
hardship for an extremely vulnerable segment of society. At the
same time, we are not convinced that it would offer a
countervailing increase in the availability of representation
for SSI claimants. It is highly unusual for the government to
offer its services as a collection agent for a private
enterprise and it is especially inappropriate for the Social
Security Administration (SSA) to serve as a collection agent
for attorneys seeking to recover fees from this uniquely
disadvantaged population.
Elderly and or disabled SSI claimants constitute one of the
most vulnerable segments of our population. The purpose of the
SSI program is to provide a minimum subsistence level of income
to aged, blind, or disabled individuals who have little or no
income or resources to enable them to meet their basic needs
for food, clothing, and shelter. The federal benefit rate for
an individual living alone is pegged at 74% of the federal
poverty level, or $512 per month. A modest state supplement is
also provided in approximately half of the states. In order to
qualify for SSI, an individual's countable income, from all
sources, cannot exceed these basic subsistence benefit levels.
In addition, countable resources cannot exceed $2,000.
With such extraordinarily limited income and resources, the
ability of an SSI claimant to survive for a lengthy period,
while awaiting a determination of his claim, often depends on
loans from friends and relatives. These friends and relatives
are themselves often struggling on limited incomes and count on
being repaid. It is common for retroactive awards to be fully
consumed by the repayment of loans from friends and relatives,
payment of past due rent to an understanding landlord, payment
of a security deposit on an apartment, or purchase of furniture
or other items the individual has foregone and will never be
able to purchase on a meager SSI grant.
In some states, SSI claimants receive interim assistance
benefits to meet a portion of their needs while they await a
determination of their SSI claims. These benefits must also be
repaid from the retroactive award. The amount of the temporary
assistance is withheld from the retroactive award by SSA and
paid directly to the state.
The withholding of attorneys fees from an SSI retroactive
award is contrary to the purpose of the SSI program. The
payment of attorney fees when coupled with repayment of a state
interim assistance grant could effectively wipe out a
claimant's retroactive award, leaving her little money to repay
the debts she incurred for food and shelter while awaiting a
decision from SSA. For SSI children, in many instances, it
would result in little, if any, money for the dedicated
accounts that Congress required to be established with the
proceeds of retroactive awards. These accounts, required by
legislation enacted in 1996, must be used for the purchase of
items or services that improve or treat the child's condition
or otherwise relate to the child's disability.
There is no evidence that the withholding of attorneys fees
from retroactive SSI awards will increase the availability of
representation for SSI claimants. However, there is reason to
believe that it will increase the cost of representation for
those who do have representation. In determining the fee to be
charged, an attorney normally acts in the same manner as other
business people and considers the cost of providing the service
and the amount the client is willing and able to pay. However,
when the attorney is in the enviable position of having the
government act as his collection agent, there is no need to
consider the client's willingness and ability to pay. At
present, many private attorneys providing representation to SSI
claimants do so at a reduced fee, in some instances out of a
genuine concern for the needs of the SSI population and, in
other instances, out of a practical realization that a fee will
be paid voluntarily only if it is set at a level that is
reasonable for clients with limited financial means. Once the
government takes assumes responsibility for collection of the
fee, we can expect that almost all attorneys who accept these
cases for a fee will raise their rates and charge the maximum
amount allowed under the fee agreement. Price competition in
SSI representation will be a thing of the past.\1\
---------------------------------------------------------------------------
\1\ At present, the government serves as collection agent for fees
in Title II cases where the attorney has a fee agreement with the
client for a fee not to exceed $4,000 or 25% of the retroactive award,
whichever is less. The result has been a total elimination of price
competition in Title II cases with almost all attorneys uniformly
charging the maximum amount allowable since collection is assured.
---------------------------------------------------------------------------
Perhaps, the higher fees and elimination of price
competition could be justified if there were some assurance of
significantly greater access to representation for SSI
claimants. We have not seen any such assurance. While we have
not seen statistics on the percentage of SSI claimants
represented as opposed to SSDI claimants, we would expect the
percentage of SSI claimants with representation to be lower for
several reasons: 1) retroactive awards are significantly lower
than for SSDI; 2) the SSI population is perceived by many
attorneys as being more difficult to work with; 3) medical
records for SSI claimants tend to be less developed because, in
many instances, they have less access to health care and are
less likely to have consistent treatment from a single medical
source; and 4) SSI claimants are likely to have a lower level
of awareness concerning available options for representation.
Government collection of the fee will do little to address
these problems. Thus, a disparity in the level of
representation would be expected to continue even with SSI fee
withholding.
In the absence of solid assurance that SSI attorneys fee
withholding will result in significantly greater levels of
representation, Congress should not take an action that will
eliminate fee negotiation for SSI claimants and create severe
hardship for some of the poorest Americans who will bear the
brunt of the increase in fees and costs. We are sympathetic to
the situation of those attorneys who have had a significant
reduction in their income as the result of imposition of the
user fee on retroactive Title II awards earlier this year.
However, Congress should not correct the situation of those
attorneys in a manner that places the burden on those least
able to shoulder it.
Chairman Shaw. The vote has cut down on the attendance here
at this hearing. I am going to ask each one of you if we could
submit questions to you and if you could reply in writing, we
would be most appreciative. I just have one area that I do want
to briefly touch on. You have heard all of us up here comment
on the length of time in which it takes one of these cases, 300
days from the day the appeal is filed to the day that the
adjudication is made, and then roughly 60 days after that for
the amounts received. That is unconscionable length of time.
Mr. Lieberman, as a former judge in this inefficient
system, could you comment to me as to exactly why does it take
this long, how could we streamline it, and what could this
committee do in order to facilitate those suggestions?
Mr. Lieberman. Well, of course, the simple answer, Chairman
Shaw, would be to give greater funding to the administration so
that they would have the personnel to do that. But absent that,
one of the reasons for the delays is that people generally, if
they are going to get representation, do not get that until the
time that the hearing is set. And under the statute, as it
presently is given, 20 days notice is given before the hearing
takes place. I would suggest that 20 days be increased to 60
days because the sooner an individual goes out and gets an
attorney, they could then have the attorney do what is
necessary, which is mainly developing the medical evidence and
producing it in a fashion that substantiates their entitlement
to the benefits.
At one time, the time limit was ten days, and when
Commissioner Bradley was associate commissioner, she changed
that to 20, but there is nothing written in stone. I would say
the sooner that the Social Security Administration gives a
notice of when a hearing is going to take place, the sooner
that case can start getting developed. And that would save a
considerable amount of time because what typically happens is
someone will come to my office ten days before the hearing, say
they need an attorney, and we try very hard not to have that
continued because it is hard to get on the docket again.
But many times we are not able to get all the evidence in
in that short period of time. If we had an additional period of
time to do it, we could. The hearing would take place and there
would not be those delays and continuances that the
administration abhors.
Chairman Shaw. Never having practiced in this arena, is it
very similar to a case before the bar where you go out and you
do your discovery, you take your depositions, you set up the
times for the deposition and all of this, or do you just--
Mr. Lieberman. Well, the rules of evidence are greatly
relaxed because it is a non-adversarial proceeding. As a
result, there are no such things as depositions although I
frequently do take sworn statements from the medical doctors
that are treating the patient.
Chairman Shaw. There is no lawyer before the judge that is
taking the side to uphold the decision of the Social Security
Administration?
Mr. Lieberman. No, Chairman Shaw. The administrative law
judges are the only type of judiciary where they wear three
hats. They wear one hat to protect the integrity of the trust
funds, they wear a second hat to represent the claimant, even
if the claimant is represented, and they wear the third hat to
be the adjudicator in the case. It is almost impossible.
Chairman Shaw. It is almost a Chinese courtroom; is it not?
[Laughter.]
Mr. Lieberman. And it is most difficult, but they do that,
and to their credit in general I think they do it well. But
because the rules of evidence are so different and because you
can accept hearsay in evidence, for whatever it is worth, to an
outside person who is an attorney practicing in a different
field, it all seems like a Chinese courtroom.
Chairman Shaw. Yes. That is interesting. I have a number of
questions right here and I will go ahead and submit them to you
and also give the other members of this committee, an
opportunity to submit them also.
Chairman Shaw. I want to thank you all very much for taking
the time to be with us this afternoon. There is a lot of work I
think we need to do. On the funding, in order to try to do
that, it would appear to me that unless we are getting further
and further and further and further behind, in other words,
that 300 days is soon going to be 400 days, it would seem to me
that we could do something to get this backlog so we could get
this thing right where you at least reduce the time to six
months, which it seems like an awful lot to me even there.
Mr. Lieberman. Well, there are things in place, Mr. Shaw,
that with the Hearing Improvement Process that are going to
start to be implemented throughout the country and I think that
will have some impact on the delay.
Chairman Shaw. I would like all four of you to feel free if
you have any suggestions that you want to put in writing to me
of areas that we might look into. I feel as the chairman of the
subcommittee that we are really leaving the most vulnerable
among us in limbo and in harm's way by not doing what we can to
expedite the process. I mean it is easy for us to sit here and
say, well, that is a year, but so what, you get your money, not
if you are not buying groceries and not if the landlord is
putting you out on the street. That is a terrible situation and
most of the people who qualify to come before this court are
down on their luck, and that is too bad.
[Questions submitted by Chairman Shaw, and Ms. Shor's, Mr.
Liberman's, Ms. Ford's, and Ms. Kaufmann's responses follow:]
National Organization of Social Security
Claiments' Representatives
Midland Park, NJ 07432
July 13, 2000
The Hon. E. Clay Shaw, Jr., Chairman
Subcommittee on Social Security
Committee on Ways and Means
U.S. House of Representatives
Washington, D.C. 20515
Dear Chairman Shaw:
This letter provides our responses to the questions you posed in
your letter of June 22. That letter was a follow up to the hearing you
conducted on attorneys' fees in June 14. We appreciate your on-going
interest in these important issues.
The questions posed follow.
1. What suggestions do you have to improve the hearings and appeals
process to provide more timely decisions and more timely benefits in
successful claims?
2. As you know, Mr. Shaw and Mr. Matsui have introduced legislation
to encourage SSA to improve their processing time of attorneys fees. If
the fee is not paid within 30 days, no assessment would be charged. How
would this incentive work in your view and can the time frame be
achieved?
3. You indicate in your testimony that many successful claimants in
the SSI program do not pay their representatives an approved fee. Do
you have any specific data to support your claim?
4. You indicate that many SSI claimants who do not have
representation would be more likely to have representation if their
attorney fees were directly paid to them by SSA. According to your
testimony, today 57% of SSI claimants are represented by an attorney
compared with 83% of Social Security claimants. What improvement would
you expect to see with the percent of SSI claimants represented?
5. Testimony from the National Senior Citizens Law Center indicates
that there is no evidence that the withholding of attorneys fees from
retroactive SSI awards will increase the availability of representation
for SSI claimants. How do you respond?
6. You indicated that the use of fee petitions (where specific
costs associated with a case are detailed and subject to approval) has
increased over the past several years because SSA has not increased the
$4,000 cap on fee agreements. Yet SSA testified that the use of fee
petitions has declined from 30 percent in 1995 to 13 percent in 1999.
Do you have any problems with their numbers?
7. Do you have any suggestions on how to streamline the fee payment
process?
8. You indicate that SSA sometimes takes upwards of a year to act
on a fee petition. What changes to the process would you recommend to
lessen this time frame?
Recommendations to improve the hearings and appeals process
1. Provide SSA with adequate resources to meet current and future
needs by removing its Limitation on Administrative Expenses (LAE)
budget authority from the domestic discretionary spending category.
NOSSCR is concerned about SSA's readiness to deal with the
impending increase in its workload as the ``baby boom'' generation
approaches the peak age for onset of disability and, subsequently,
retirement. Testimony at the Subcommittee hearings on February 10 and
March 16, 2000, painted a bleak picture regarding SSA's ability to deal
with the increased work, at the same time that its own workforce will
reach peak retirement numbers. To exacerbate this problem, SSA's budget
continues to be cut from levels that would allow it to adequately
address current and future service delivery needs.
Most cases handled by NOSSCR members are at the hearing or Appeals
Council level. While current processing times at most Offices of
Hearings and Appeals are decreasing, they are still unacceptably high.
Delays at the Appeals Council level are far worse with many of our
members reporting a wait of up to two years from the time the appeal is
filed. A claimant cannot proceed with an appeal in federal district
court until the Appeals Council has acted. Thus, while their medical
and financial situations are deteriorating, claimants are forced to
wait for many months before receiving a decision.
To improve delays, better develop cases and implement technological
advances, SSA requires adequate staffing and resources. NOSSCR strongly
agrees with the Social Security Advisory Board's unanimous and
bipartisan recommendation that SSA's administrative budget, like its
program budget, be removed from the discretionary domestic spending
caps. This would allow Congress to approve funding for SSA that would
permit the agency to address current service delivery needs and
planning for the future.
2. Improve full development of the record earlier in the process
Developing the record so that relevant evidence from all sources
can be considered is fundamental to full and fair adjudication of
claims. Unfortunately, very often the files that denied claimants bring
to our members show that little development was done at the initial and
reconsideration levels. Claimants are denied not because the evidence
establishes that the person is not disabled, but because the limited
evidence gathered cannot establish that the person is disabled. The key
to a successful disability determination process is having an adequate
documentation base and properly evaluating the documentation that is
obtained. Unless claims are better developed, the procedural changes
currently being implemented by SSA will not improve the disability
determination process.
NOSSCR supports full development of the record at the beginning of
the claim so that the correct decision can be made at the earliest
point possible. Claimants should be encouraged to submit evidence as
early as possible. The benefit is obvious: the earlier a claim is
adequately developed, the sooner it can be approved and the sooner
payment can begin. However, the fact that early submission of evidence
does not occur more frequently is usually due to reasons beyond the
claimant's control. Recommendations to improve the development process
include:
SSA should explain to the claimant, at the beginning of
the process, what evidence is important and necessary.
DDSs need to obtain necessary and relevant evidence.
Representatives often are able to obtain more relevant medical
information because they use letters and forms that ask questions
relevant to the disability determination process. DDS forms usually ask
for general medical information (diagnoses, findings, etc.) without
tailoring questions to the Social Security disability standard. The
same effort should be made with non-physician sources (therapists,
social workers) who see the claimant more frequently than the treating
doctor and have a more thorough knowledge of the limitations caused by
the claimant's impairments.
Improve provider response rates to requests for records,
including more appropriate reimbursement rates for medical records and
reports.
Provide better explanations to medical providers, in
particular treating sources, about the disability standard and ask for
evidence relevant to the standard.
3. Streamline the process without impairing the claimant's right to
a full and fair hearing.
NOSSCR supports SSA's recent efforts to reduce unnecessary delays
for claimants, so long as they do not affect the fairness of the
process to determine a claimant's entitlement to benefits.
a. Initial and reconsideration levels
In 10 prototype states, SSA currently is testing two significant
changes at the pre-hearing levels of the process: elimination of the
reconsideration level and adding a predecision interview, also known as
a ``claimant conference.'' We believe that these changes are positive
and NOSSCR has long advocated the value of providing claimants with a
face-to-face meeting with the decision maker.
However, we have concerns how the claimant conference is being
implemented. Reports from members indicate that most conferences are
not in person and are conducted by phone. The content varies, depending
on the particular DDS adjudicator involved. Further, claimants should
not be discouraged from pursuing an appeal if the decision is denied.
b. Hearings and appeals levels
Current processing times at the ALJ and Appeals Council levels are
unacceptably high. In FY 99, the average processing time was 313 days
at the ALJ level and 460 days at the Appeals Council level. SSA has
announced plans to address the delivery of service at both levels in
the Hearings Process Improvement plan (HPI) and the Appeals Council
Process Improvement plan (ACPI). Both plans set forth goals for
processing of claims: 193 days by FY 2002 (HPI) and 90 days by FY 2003
(ACPI).
We certainly support these goals. However, we approach the HPI plan
with serious concerns for any violations of claimants' due process
rights to a full and fair hearing, as well as any encroachments on the
decisional independence of ALJs. The HPI plan, in contrast to the ACPI
plan, involves a top-to-bottom reorganization of the hearings-level
process, including office organization. We urge the Subcommittee to
exercise its oversight authority to ensure that processing times in
fact do improve but not at the expense of the rights of claimants.
Issues to be monitored include:
Are ALJ functions being inappropriately removed and
reallocated to non-ALJ staff?
What is the impact on the complete development of cases
and recognition of issues? Are cases ``certified'' as ready to hear
before they actually are?
Are cases adequately screened for early, on-the-record
decisions?
Has the claimant's right to submit new evidence to the
ALJ, including post-hearing evidence been limited? Have ALJs been
discouraged from admitting such evidence?
Will prehearing conferences have value or will they be a
formality, adding another step to the process?
SSA recently announced expansion of its test to eliminate a
claimant's right to request review of a hearing decision by the Appeals
Council. We oppose the elimination of a claimant's right to request
review by the Appeals Council. The Appeals Council currently provides
relief to nearly one-fourth of the claimants who request review of ALJ
denials, either through outright reversal or remand back to the ALJ.
Review by the Appeals Council, when it is able to operate properly and
in a timely manner, provides claimants with effective review of ALJ
decisions and acts as a screen between the ALJ and federal court
levels.
Given the low percentage of Appeals Council decisions appealed to
federal court, it appears that claimants largely accept the decision as
the final adjudication. In addition, elimination of Appeals Council
review could have a serious negative impact on the federal courts. We
agree with the Judicial Conference of the United States' 1994 statement
opposing this plan when first proposed as ``likely to be inefficient
and counter-productive.'' Access to review in the federal courts is the
last and very important component of the hearings and appeals
structure. Court review is not de novo but, rather, is based on the
substantial evidence test. We believe that both individual claimants
and the system as a whole benefit from federal court review. The
district courts are not equipped, given their many other
responsibilities, to act as the initial screen for ALJ denials.
4. Technological improvements
The HPI plan includes a number of improvements to enhance
automation and management data collection and analysis. It also
includes a modest expansion of videoconferencing ALJ hearings at five
OHA offices. This allows ALJs to conduct hearings without being at the
same geographical site as the claimant and representative and has the
potential to reduce processing times and increase productivity. Initial
reports from our members indicate that videoconferencing has worked
well and does not compromise the claimant's right to a full and fair
hearing. The ALJ is able to observe and hear the claimant, a key factor
for an adjudicator in a disability claim. Although not mentioned in the
HPI plan, we would vehemently oppose any effort to use telephonic
hearings.
Tie timeliness of fee payment to imposition of user fee
H.R. 4633 would tie the assessment of the user fee to prompt
payment of the attorney's fee. Specifically, the user fee could be
charged only if the attorney's fee is processed and certified for
payment within 30 days of the certification of the client's benefits.
There was some confusion during the hearing as to the ``starting
point'' for the 30-day requirement. The confusion arose because some
witnesses used the date the beneficiary is placed in ``current pay''
status as the starting point for the 30-day period; others used the
date that the beneficiary's ``past-due'' benefits are certified as the
starting point for the 30-day period.
William C. Taylor, Deputy Associate Commissioner for the Office of
Hearings and Appeals, stated in his testimony, ``H.R. 4633 would not
allow SSA to impose the attorney fee assessment if payment is not made
to the attorney within 30 days after the initial certification of
payments to the beneficiary.'' He indicated that only 10% of the cases
could be processed under this standard, and that two-thirds of the
expected revenue from the user fee would be lost.
But the intent of the bill is to ``start the clock'' with the date
that the beneficiary's ``past-due'' benefits are certified. At this
point, the amount of the attorney's fee is known and ready to be
certified. A thirty-day time limit appears eminently reasonable,
particularly in light of many attorneys' experience in the early spring
of 2000 when they were receiving their attorneys' fees checks within 30
days of their clients' receipt of their ``past-due'' benefit checks.
This standard is reasonable, and SSA has demonstrated an ability to
meet it.
Representation for SSI Claimants
Our association maintains a referral service for claimants seeking
representation. Many of the attorneys who participate in our referral
service indicate that they do not want referrals of SSI claimants; they
decline to represent SSI claimants because of their past experience
with unpaid attorneys' fees. We routinely receive dozens of calls daily
from SSI claimants who are seeking lawyers. We often are unable to make
referrals for these callers because, although there are attorneys in
their area who accept Social Security cases, there are no attorneys in
their area who accept SSI cases.
On June 7, 2000 we surveyed a sample of our members on several
topics. On the subject of SSI cases, we asked the following question:
``Do SSI claimants contact you for representation? Do you take SSI
cases? Would a withholding and direct payment mechanism in SSI cases
change your practice?''
All of the respondents supported a fee payment mechanism for SSI
cases. These are typical responses:
``I do take SSI cases but in a very reluctant manner. Since there
is no guarantee that my legal fees will be paid, I prefer the Title II
cases. I would certainly increase my practice in SSI cases if the
direct payment mechanism for SSI cases were implemented. There are a
lot of people who need legal representation in this area, but because
of previous bad experiences in collecting my fees, I will not get
involved with them.'' Margarita Marchan-Mankus, Esq., Aurora, IL
``Effective January 1, 2000 I stopped taking SSI claimants after
twenty one years of accepting them on the same basis as Social Security
Disability clients. I stopped taking them because I was unpaid by so
many SSI clients recently that I was losing money. If fees were
withheld and paid directly, I would happily resume accepting them on
the same basis as DIB clients.'' Charles D. Bennett, Jr., Esq.,
Roanoke, VA
``Yes, SSI claimants frequently contact me for representation. I
only take these claims if they also have an arguable SSDI claim. I do
not take straight SSI claims because it is so hard to collect the fee.
(I stopped taking SSI-only claims about 5 years ago when I was
repeatedly not paid my approved fee). If a fee withholding mechanism
was instituted, I most definitely would again take SSI-only claims.''
``My office receives MANY calls from SSI claimants. I do accept
some SSI cases, however, I have had to increasingly decline to do SSI
cases because many claimants do not pay the attorney's fee awarded.
This problem has occurred particularly with child's SSI cases to the
extent that I almost never accept a child's case anymore. In EACH of
the last two years, I have lost more than $25,000 in fees not paid by
SSI claimants. If withholding and direct payment is instituted on SSI
cases as on Social Security disability cases, I would be happy to
assist SSI claimants again.'' Betty M. Tharrington, Esq., Norfolk, VA
``SSI claimants frequently contact us for representation. We are
very selective in deciding to represent a client where there is no
substantial DIB component to the claim. This is based upon our
experience of having problems collecting our fee in SSI-only cases. A
withholding and direct payment mechanism would drastically affect our
practice in this area. We would definitely accept many more SSI
cases.'' Cynthia C. Berger, Esq., Pittsburgh, PA
``We do very few SSI cases because we have a hard time getting
paid. We view SSI cases as the equivalent to pro-bono work. We take SSI
cases on a case-by-case basis due to payment problems. If fees were
withheld, we would do more SSI work.'' Michael A. Comisky, Esq.,
Shawnee Mission, KS
``Yes, SSI claimants contact me, usually to beg me to take their
case. I usually refuse because in the majority of SSI cases, the
successful claimant needs the money more than I do, in their own minds,
and they do not pay. That's a majority of my experience, as in about
70%. Thus, I only take an SSI case where I have some reasonable
expectation of payment. I'm softer when it comes to children's SSI
cases, but the parent usually does not pay either. I would like to take
on SSI cases as I do SSDIB cases, but I can't do so without being paid.
I think it's terrible that the government knowingly discriminates
against the poor this way.'' Richard D. Tolin, Esq., Southfield, MI
``A great many SSI claimants contact me for representation. I do
take SSI cases, though I take many less than I used to because I
frequently have been left unpaid for cases which I won. A withholding
and direct payment mechanism would greatly change my practice -I would
no longer be reticent to take these cases.'' Susan M. Evans, Esq.,
Cleveland, OH
``I do not handle SSI claims solely. If there is a dual claim,
Title II and SSI, I will handle them. I have found, in the past,
because the checks are sent directly to the claimant, they have so many
other commitments for money that I am the last to be paid and usually
by the time it comes to pay me there are no funds. I have been
'stiffed' so often I have just refused to take anymore SSI claims. I
believe I can do a good job of handling SSI claims, but unless I have
some assurance of being compensated I cannot and will not handle a
solely SSI claim. I guess if Social Security does not want the claimant
to be represented by a competent and capable attorney, this is one way
to keep them from doing it and that is seeing the attorney is not
paid.'' Richard W. Cardot, Esq., Elkins, WV
If the attorney received assurance as to the payment of a fee for a
successful claim, I would anticipate the same rate of representation
for SSI claimants as for Social Security claimants. The administrative
processes for the two types of claims, from initial application through
federal court review, are almost identical. The disability
determination standards are the same. We know from SSA's statistics
that the rate of representation for SSI claimants is significantly
lower than for Social Security claimants. We know that attorneys would
represent SSI claimants if the fee payment structure of the two
programs were the same. The sources of free legal representation
currently available to SSI claimants are unfortunately inadequate to
fully meet the need. As Eileen P. Sweeney from the National Senior
Citizens Law Center testified before this Subcommittee at a hearing on
May 13, 1987, ``While the legal services programs represent thousands
of people on Social Security and SSI issues annually, there is no way
that these programs can possibly meet the entire demand. As a result,
mechanisms are needed which will assure the private attorney that, upon
successfully resolving a Social Security or SSI case, s/he will be able
to secure his/her fee. This is the only way to assure that competent
counsel is available and accessible to disabled individuals when they
require assistance.'' Attorneys' Fees in Social Security Disability
Cases: Hearing before the Subcommittee on Social Security, page 96,
100th Cong., 1st Sess. (1987).
Fee agreement ceiling
Many claimants' representatives report that their use of fee
petitions instead of fee agreements has increased recently because of
the fee agreement's fee cap. In his testimony, OHA Deputy Commissioner
Taylor referred to a ``special systems run on a sample of attorney fee
cases.'' We have no information as to the size of the sample or the
reliability of the extrapolated percentages.
With a COLA adjustment, the fee ceiling would be $5,000. This
matches the current authority of Administrative Law Judges in fee
petition cases.
Streamlining the fee payment process
Once the adjudicator, at any level of the process, has found that a
claimant is eligible for benefits, the first effectuating task is for
SSA to put that claimant into ``current pay status'' and to begin the
on-going monthly checks. Not until this is completed does SSA turn to
payment of the claimant's past-due benefits, or to calculation and
payment of the fee. We concur that this is the appropriate priority for
administrative tasks.
Once the claimant is in ``current pay status,'' the most
straightforward procedure for fee agreement cases is to process the
claimant's past-due benefit payment and the attorney's fee payment at
the same time.
Streamlining the fee petition process
Many representatives believe that the agency's slow processing of
fee petitions is deliberate, that it is designed to discourage use of
the fee petition process and to promote use of the fee agreement
process. This is a serious concern, because the choice of fee method
belongs solely to the individual representative and is outside the
agency's purview. If the agency were to streamline its process to
reduce the number of ``hand-offs'' that occur before a fee petition
reaches the adjudicator with authority to act on it, this concern could
be set aside as erroneous.
Currently, Administrative Law Judges have limited authority to
approve fees. They may approve fees up to $5,000. If they believe a
higher fee is warranted, their role is to forward the fee petition to
the Regional Chief
ALJ. The length of time that fee petitions wait to be forwarded is
often inexplicably long. SSA should institute an internal tracking
system to ensure that fee petitions are, where necessary, forwarded
promptly. The number of instances where this forwarding process is
needed would be reduced if the authority of Administrative Law Judges
to set fees were increased.
Claimants' representatives wait until they have received and
reviewed the award information for their clients and for any eligible
dependents before they file their fee petitions. Clearly the often-
substantial delays in providing the award information will cause the
fee petition process to be lengthened. Faster effectuation and
notification would enable representatives to submit their fee petitions
more quickly.
We appreciate the opportunity to respond to your questions. Please
let me know if we may provide any additional information.
Very truly yours,
Nancy G. Shor
Executive Director
Lieberman & Gutierrez, P.A.
Miami, FL 33130
July 13, 2000
The Honorable E. Clay Shaw, Jr., Chairman
Social Security Subcommittee
United States House of Representatives
Washington, D.C. 20515
RE: June 14, 2000 Hearing
Dear Chairman Shaw
Thank you for the opportunity to testify before the Subcommittee on
June 14, 2000. I am pleased to respond to the written questions you
have asked.
The amount of the attorney fee ``user fee'' appears to be
excessive. OHA Deputy Commissioner William Taylor testified at the
hearing at 87% of fees paid in 1999 were processed under the fee
agreement system. This requires approving a usually standard contract
between the parties; calculating 25% of the past-due benefits (up to a
$4,000 ceiling); inserting the form fee language into the claimant's
award notice; and notifying the Treasury of the payee and the amount of
the payment. I would characterize these as generally very routine
tasks.
My own experience is that I am filing considerably more fee
petitions now. Many of my colleagues in Florida tell me that they are
more frequently turning to the fee petition process. Although we
generally do receive a fee authorization for the fee amount we have
requested, we are very discouraged about the length of time this
process takes. Adjusting the ceiling for the fee agreement process
would certainly be helpful, since more cases would be submitted with a
fee agreement.
Between February and June, my attorney's fee payments speeded up
considerably and then slowed. The elimination of the 15-day waiting
period for fee agreement cases has doubtless been a positive factor.
Based on my conversations with employees in various components at
the Social Security Administration, I can report that the most frequent
comment I hear is that there are not enough personnel to process the
workload. This comment comes from personnel inside the Offices of
Hearings and Appeals with regard to cases at the administrative
hearings level, as well as from benefit authorizers who process current
and past-due benefits for successful claimants.
I would endorse the specific recommendations that Nancy Shor has
provided in the written responses to her questions.
Thank you for this opportunity to respond to your questions. Please
let me know if there is any additional information that I could
provide. I thank you for your leadership in considering these issues of
such importance to claimants and to their representatives.
Very truly yours,
Lyle D. Lieberman
Consortium for Citizens with Disabilities
Washington, DC 20006
July 14, 2000
The Hon. E. Clay Shaw, Chairman
Subcommittee on Social Security
U.S. House of Representatives
Washington, DC 20515
Dear Chairman Shaw:
This is in response to your letter of June 22 requesting additional
information on processing of attorneys fees by the Social Security
Administration. Specifically, you asked:
1. You indicate that the current process for the payment of
attorneys fees under title II (Social Security) cases should be
extended to title XVI (SSI) cases. Could you elaborate. Should there be
restrictions as to the limit of the fee? For example, do you believe
that the current cap of $4,000 or 25% of the back pay for a fee
agreement be raised?
2. How do you reconcile your position on the extension of direct
payment to the SSI program to that of Jenny Kaufmann of the National
Senior Citizens Law Center? Ms. Kaufmann has indicated that withholding
attorney fees from past-due benefits is contrary to the purpose of the
SSI program and, when coupled with the need to repay interim assistance
agreements, could wipe out the claimant's ability to repay debts for
food and shelter.
3. What suggestions do you have to improve the hearings and appeals
process to provide more timely decisions and more timely benefits in
successful claims?
In response to your first question, I believe that the limits for
SSI should be the same as the limits for Title II cases. In addition,
while the 25% overall limitation should remain the same, I believe that
the $4,000 cap should be indexed for inflation.
The CCD Social Security Task Force believes that all dollar limits
in the Title II and XVI programs should be annually indexed for
inflation. These programs are designed to assist the individual to deal
with the costs of everyday life when the person is restricted from
working due to disability. Those everyday costs are most certainly
affected by annual increases in the cost of living. The dollar figures
that set limits on income and resources and various disregards should
also reflect increases in the cost of living. Otherwise, the dollar
limits become meaningless over extended periods of time, further
restricting the definition of disability annually.
The same arguments apply to the attorneys fee program designed to
encourage attorneys to represent people in difficult SSI and Title II
cases. Without annual cost of living increases, the incentive
diminishes each year.
In response to your second question, the CCD Social Security Task
Force position is based upon balancing the interests of the individual
in meeting his/her needs both past and present. While the payment of
attorneys fees certainly will reduce the amount that the individual has
available to meet accumulated obligations and current needs, it is
important to note that, for the payment of attorneys fees to occur, the
individual would have been successful in proving eligibility for
benefits and, therefore, will be better able to meet future needs as
well. We reiterate that the system for determining disability is so
complex that without the assistance of competent, experienced legal
representatives, many applicants for SSI would be unable to prove their
eligibility and would, therefore, have no benefits to assist them in
meeting their obligations, past, current, or future.
In response to your final question, I believe that there are
several things that can be done to improve the process and provide more
timely decisions. First, SSA must be provided with the resources to
fully meet its administrative responsibilities. This requires that the
Limitation on Administrative Expenses budget authority be removed from
the domestic discretionary spending category. In addition, better case
development before a decision is made is important. The response to
questions submitted by Nancy Shor of NOSSCR includes several important
recommendations for addressing better case development. (The CCD Social
Security Task Force also submitted a statement discussing some of these
issues for the record of a hearing in this Subcommittee on August 3,
1995.) Finally, SSA's current testing for streamlining the adjudication
process could yield positive results for beneficiaries. However, we
urge the Subcommittee to remain vigilant to ensure that any recommended
changes are, in fact, improvements that do not harm beneficiaries or
impair their rights to a full and fair hearing.
Thank you for this opportunity to provide additional information.
Please let me know if the CCD Social Security Task Force can provide
any further information or assistance.
Sincerely,
Marty Ford
Co-Chair
Social Security Task Force
National Senior Citizens Law Center
Washington, DC 20005
July 14, 2000
The Hon. E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Committee on Ways and Means
U.S. House of Representatives
Washington, D.C. 20515
RE: SSI Withholding
Dear Chairman Shaw:
Thank you for your letter of June 22, 2000, posing several
questions to follow up on my testimony before the subcommittee on June
14, 2000. We have answered the questions individually and as completely
as we are able to do. If you have further questions, I would be happy
to respond to them.
1. Our statement that the fee agreement process has eliminated
price competition is not based on any study and we are not aware of any
formal study having been undertaken. Rather it is based on a large
amount of anecdotal evidence, including personal experience, which we
have not heard contradicted and is supported by testimony presented by
SSA (see page 5 of their written statement) and Mr. Lieberman to the
Subcommittee on June 14, 2000. The fee agreement provision makes the
approval process fairly simple for the Social Security Administration
(SSA). Every T-II fee agreement we have seen or heard of, in all parts
of the country, provides for payment of 25% of past due benefits or
$4,000, whichever is less.
2. The evidence that some attorneys charge reduced fees for SSI
cases is based on statements made by private attorneys, in public and
private forums, as to their individual practices. We are not able to
quantify this, except to say that, from what private attorneys tell us
about their practices, there is more variation in fees charged to SSI
claimants and the methods of collecting the fee. Obviously, neither the
proponents or opponents of direct payment of fees in SSI cases have any
objective quantifiable evidence as to the impact of such a change.
However, under the current system, if an attorney wishes to have the
client voluntarily pay the fee, the fee must be set at a level the
client can pay. If the fee is set too high, it will conflict with other
debt obligations the client has and the client may choose to pay the
landlord, the grocer and the utility company and leave the lawyer with
nothing.
3. We agree with Ms. Ford of the Consortium for Citizens with
Disabilities on the importance of representation for persons seeking
both Social Security and SSI Disability benefits. Indeed, a case can be
made that representation is even more important for SSI claimants
because of the greater complexity of the SSI program with its income
and resource rules. We agree that attorneys who provide this service
should be paid. But so should the landlord who has waited for the rent,
the local grocer who has provided food on credit, the doctor who has
spent time evaluating and diagnosing the disability, and the relative
who has loaned his or her scarce funds to enable the individual to
survive while awaiting SSI benefits. Any state that has paid interim
assistance benefits to the client pending the approval of disability
benefits also expects to be repaid those benefits. Many of these
claimants have children or child support obligations that must be met
and they feel an obligation to provide for their children out of their
own meager funds. We do not believe that it is appropriate for Congress
to give any one creditor priority over other creditors who have also
provided valuable services.
4. We agree with Ms. Ford and others that the available options for
representation for SSI claimants are limited. At present,
representation is provided by some private attorneys, some legal
services organizations, some Protection and Advocacy programs and some
law school clinic programs. Availability of representation varies
significantly from place to place and from time to time. In most
places, it is not sufficient to meet the need. However, we are not
convinced that a provision for withholding attorneys fees from past due
SSI benefits would make a significant impact on the availability of
representation for SSI claimants even though it would have a
significant impact on loss of income and individual autonomy for those
recipients.
Obviously, neither side can present any hard data on the impact of
fee withholding on the availability of SSI representation. A simple
comparison of statistics for T-II claimants and SSI claimants may not
be completely informative and may not be an accurate comparison since
the selection criteria are also different. Although the disability
standard is the same, the SSDI and SSI populations are different. The
SSI claimant is less likely to have well developed medical records and
will ultimately receive a significantly smaller retroactive award
because of the lower SSI grant level and the inability to provide
benefits for periods prior to the date of application. SSI claimants
often do not have access to continuing health care coverage or are
dependent on the existence of free medical and mental health clinics
who do not have the time to complete reports for submission to SSA. SSI
claimants cannot afford to purchase costly consultative examinations
that are sometimes necessary to prove their case (e.g.
neuropsychological examinations). Instead, they depend on SSA and that
state disability determination agencies to order and pay for
substandard consultative examinations. Finally, there are numerous
changes occurring in the appeals process that are shortening the time a
claimant must wait to appear before an administrative law judge. In
many areas, claimants are having hearings within a year of application,
substantially reducing back awards and making it more difficult for
clients to prove that they meet SSA's strict all or nothing disability
definition.
You also ask about the percentage of the our workload that consists
of SSI claimants. The National Senior Citizens Law Center is not a
direct provider of legal services to individual claimants for SSI,
Title II or any other program. Our role is to advocate policies
beneficial to older individuals and individuals with disabilities, to
litigate cases impacting on significant numbers of individuals and to
provide technical assistance to attorneys and other advocates across
the country who are providing direct representation to individuals. We
occasionally co-counsel with attorneys on SSI issues of broader impact.
In this latter role, we provide assistance to a large number of
attorneys who are representing SSI claimants. This includes both
attorneys in private practice as well as those employed by various
legal services organizations. We are familiar with the valuable, often
unheralded work, being done by both legal services lawyers and private
attorneys on behalf of SSI claimants.
5. We have three recommendations to fee withholding that can be
taken, both by SSA and by Congress, to provide greater assurance that
attorneys representing SSI claimants will receive their fees.
SSA can see to it that all attorneys representing SSI
claimants receive timely notice of payment of the past due award to
their clients, so that they might be able to contact the client while
the client has the money rather than a few months later.
Congress can amend 42 U.S.C. 1383(a)(10)(B)(iii)(I) the
provision for installment payment of large past due SSI benefits, by
simply providing for the addition of attorney fees to the first
installment just as outstanding debts for food, clothing, shelter or
medicine can now be added to the initial installment payment.
This amendment would be reasonable because of the statutory
limitations placed on payment of SSI benefits through installments. It
would allow the beneficiary to access more funds, up front, to repay
necessary food, clothing and shelter debts and any agreed attorney
fees. It would retain the ability of the SSI claimant to sit down and
negotiate a fair attorney fee agreement.
As we stated previously, initially the back award is often consumed
by debts to landlords and family members who have been supporting the
claimant pending receipt of benefits. These debts need to be repaid as
quickly as possible after benefits are awarded. This is even more true
because of the smaller initial installment of the back award. However,
an SSI beneficiary can request an ``advance'' on the remaining funds to
repay additional outstanding debts beyond the first installment
payment. It would result in no additional administrative burden to the
local SSA field offices to process these requests since they are
already processing similar requests under the current rules. A client
would merely have to submit a copy of the approved fee agreement and
the field office could process the request. The check is still issued
to the client but there is a greater incentive to pay the attorney
because the SSI beneficiary has signed a document verifying to SSA that
this is a debt that needs to be paid.
A third alternative is to make changes to the payment
process of Title II attorney fees. Many private practice attorneys have
found that they can no longer afford to represent SSI claimants because
of the increasing costs of representing claimants. Elimination of the
burdensome ``user fee'' would help.
Private practice attorneys have seen the value of their services
for SSDI and SSI recipients eroded over time. Taking these steps, in
combination with allowing for advancement of attorney fees to SSI
recipients from their back awards, should go a long way in restoring
the willingness and ability for the private practice bar to assume
responsibility for representing SSI claimants.
6. We agree with the characterization of the complexity of the
disability determination and adjudication system and certainly agree
that representatives provide a valuable service to SSI claimants as
already stated above. The objection we have is in placing the debt to
an attorney before the basic living expenses that the SSI program was
enacted to cover.
7. There are many suggestions to improve the hearings and appeals
process to provide more timely decisions that would constitute a
hearing in and of itself. The most important suggestion we have is to
provide SSA with the funds it needs to administer the program. We
support the position of the Consortium for Citizens with Disabilities
Social Security Task Force in urging Congress to remove SSA's
limitation on administrative expenses from the domestic discretionary
budget caps. SSA's workloads are increasing and it cannot keep up with
the demands being placed on it as the baby boomers retire and as it
implements the Ticket to Work program. SSA has been forced to downsize
its workforce over the past few years just as the demands for services
has increased. Without adequate staffing, the processing of
applications for all benefits, not just disability benefits, is unduly
delayed. The Appropriations Committees need to have the flexibility to
approve adequate funds for the administration of Social Security
programs without hurting or weakening other human services programs.
SSA and all the state disability determination programs (DDS)
should have adequate funds and be required to purchase medical exams
that utilize advances in medical technology and psychiatric evaluations
to document an individual's physical and mental functional capacities.
Respectfully submitted,
Jenny Kaufmann,
Staff Attorney
Gerald McIntyre,
Managing Attorney, LA
Well, thank you all again and we will conclude this
hearing.
[Whereupon, at 4:12 p.m., the hearing was adjourned.]
[Submissions for the record follows:]
Advocates for the Disabled, Inc.
Phoenix, AZ 85012
The Honorable E. Clay Shaw, Chair
Social Security Subcommittee
Committee on Ways and Means
United States House of Representatives
Washington, D.C. 20515
RE: Social Security attorney fees
Dear Mr. Shaw:
We are administrators of a non-profit social work agency that
assists individuals with claims for public benefits provided by the
state and federal governments, including Social Security Disability
Insurance Benefits (DIB) and Supplemental Security Income (SSI). We are
aware of the process by which lawyers are able to charge and receive
fees for work on such cases, and the relative availability of legal
counsel for DIB and SSI claimants. SSI claims are treated differently
than DIB cases, with no procedure for withholding and direct payment of
fees to the lawyer from the claimant's back benefits.
It is our experience that more attorneys represent DIB claimants,
and that different fee payment mechanisms is the reason for the
discrepancy. If the same process currently used for DIB claims is
available to SSI claimants, they will have an easier time obtaining,
and a choice of, legal representation. The recently expanded and
enhanced vocational rehabilitation opportunities for DIB and SSI
recipients makes it critical that all eligible claimants have the best
chance of qualifying for benefits. The Social Security Administration
has recognized the positive contributions of legal counsel in
disability cases, and we also endorse the increased participation of
attorneys in these claims.
We are available to answer additional, specific questions, and hope
that the proposal to add SSI cases to the current attorneys' fee
process used in DIB claims will be approved. Thank you for your
consideration.
Sincerely,
Sue Schaafsma
Executive Director
Pat Campbell
Casework Supervisor
Ament, Wulf & Frokjer, S.C.
Merrill, WI 54452
June 27, 2000
A L Singleton
Chief of Staff
Committee on Ways & Means
US House of Representatives
1102 Longworth House Office Bldg
Washington DC 20515
Members of the Social Security Subcommittee:
I have represented individuals in social security disability cases
since 1971. Over time, inaccuracies and delays in payment of attorneys
fees have become commonplace.
As I dictate this statement, I have a file before me where the
claimant was paid his benefits on or about June 10, 1999. I am
dictating this statement on June 13, 2000. I have yet to receive a fee.
I have followed up with the Great Lakes Service Center any number
of times, both directly and through the Wausau District Social Security
Office. For reasons never explained to me by the Service Center, my fee
remains in a back log status.
My client has not contested the fee. There is no plausible reason,
whatsoever, for payment of this fee to take this long.
In the last several years, I cannot remember an instance where I
have felt that I was paid a fee in reasonably prompt fashion. I
typically have to wait at least four months after the client gets his
or her money before I receive my fee. Six months is not at all unusual.
Another problem that arises is duplicate payment. To my
recollection, at least a couple of times a year, we are paid our fee
twice on a case. Thankfully, we keep accurate records and have returned
such duplicate payments.
I feel that recently adopted assessment for payment of fees is an
insult to those of us who have continued to represent claimants despite
the problems in receiving our fees in timely fashion. Personally, I
look upon the assessment as a reward for an agency that does its job
poorly.
Respectfully submitted,
William A. Wulf
American Bar Association
Chicago, IL 60611
June 28, 2000
The Honorable E. Clay Shaw, Jr., Chairman
Subcommittee on Social Security
Committee on Ways and Means
U.S. House of Representatives
Washington, DC 20515
Dear Mr. Chairman:
I am writing to you on behalf of the American Bar Association in
connection with the hearings your Subcommittee held June 14, 2000, on
processing attorneys' fees by the Social Security Administration (SSA).
I ask that this letter be made a part of the record of those hearings.
The ABA supports repeal of the provisions in P.L. 106-170 that
impose an assessment on attorneys' fees in Social Security Disability
Insurance and Supplemental Security Income disability cases. The
attorney's fee in these cases is already highly regulated and capped.
The additional assessment of a ``user fee'' discourages attorneys from
representing claimants in these matters. Many such claimants are in
poor health, and have little education and few resources. Without
representation, they will not be able to navigate the appeals process
successfully, and will not receive the benefits to which they are
entitled.
H.R. 4633 would allow SSA to impose a ``user fee'' assessment on
attorneys' fees only if the fees are processed and approved for payment
within thirty days of benefit approval. We believe this legislation is
a step in the right direction. Excessive delays in payment of
authorized fees by SSA make it difficult for attorneys to accept cases
representing Social Security applicants. H.R. 4633 would encourage the
prompt payment of these fees by SSA. Thus, we would support enactment
of H.R. 4633.
Please let me know if you have any questions or if I can be of
assistance to your Subcommittee.
Sincerely,
Edward E. Kallgren
Chair
American Disability Representation Specialist Association
Hattiesburg, MS 39404-5296
June 23, 2000
A.L. Singleton, Chief of Staff
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515
Dear Mr. Singleton:
I am the Executive Director of American Disability Representation
Specialist Association. I represent a group of non-attorney disability
representation practitioners. ADRSA Associates serve all areas of the
United States including Alaska, Hawaii, and Puerto Rico.
No non-attorney representatives have fees withheld for payment. In
spite of not having fees withheld, we continue to provide consistent
high quality services and maintain our professional practices. It is
the position of ADRSA that no fees should be withheld by the federal
government to pay attorneys or non-attorneys for social security
disability representation fees. Our clients pay us direct without
having money withheld by the Social Security Administration. Our fees
are approved by the Social Security Administration before we collect
them.
The quality of representation services can suffer if payment is
automatic. ADRSA Associates sit down face to face with clients and
collect fees as approved by the Social Security Administration. It
makes ADRSA Associates more conscientious and promotes greater effort
in the provision for our services to satisfy our clients.
Having the Social Security Administration collect fees prevents the
individual American taxpayer from having the opportunity to sit with
the person to whom they owe a fee and discuss the provision of
services.
In addition, having to collect fees for attorneys is a burden on
the Social Security Administration's limited staff, provides an unequal
playing field for non-attorney representatives and is a burden on the
American taxpayer in supporting this group, attorneys, that demand
special privileges. No workload should be placed on Social Security
Administration employees to collect fees.
I request to appear as a witness before the Committee on Ways and
Means to submit a testimony on this issue.
Sincerely,
Frank P. Edwards
Executive Director
Statement of Dolores J. Bowers, Brown, Kinsey & Funkhouser, P.L.C.,
Mason City, IA
The following details of our recent experience with the SSA
document the pressures that limit the number of attorneys
available to assist claimants.
On Jan. 7, 1999, a copy of the Attorney Fee Agreement
signed by the claimant on July 16, 1998, was mailed to Judge J.
Michael Johnson, Office of Hearings and Appeals, West Des
Moines, IA.
On July 21, 1999, we received Notice of Decision--Fully
Favorable.
On Sept. 3, 1999, we received the Notice of Award stating
that $2,801.50 had been withheld from the first check for the
lawyer's fee.
I had been told by someone at our local Social Security
Office to wait three months before making inquiry as to why
payment of fee had not been received. On December 1, 1999, I
left a message on a machine at our local Social Security
Office. A response was never received.
On Jan. 5, 2000, I called 800-772-1213 and talked to Debbie
Bryant in Kansas City. She said our attorney fee claim was in
Baltimore. The Baltimore office was behind and had not released
payment yet. She said she would send our inquiry on to
Baltimore and we should follow up in two weeks. She also said
that was all we could do.
On or about Jan. 19, 2000, I called 800-772-1213 and was
told our attorney fee claim was still in the payment center and
we should give it 6 to 8 weeks from December 21, 1999.
On Feb. 15, 2000, I called 800-772-1213 and was told our
inquiry would be forwarded to Processing Center and someone
would contact us. No one did.
On March 14, 2000, I called 800-772-1213 and was told the
paperwork just went to the Payment Center on March 6 and we
should allow six weeks from March 6 to receive payment.
On March 23, 2000, Linda Hermanstorfer, Hearing Office
Clerk, Office of Hearings and Appeals, West Des Moines, IA,
wrote stating that if we wanted to collect a fee, a fee
petition needed to be completed.
On March 29, 2000, the fee petition was received for
completion.
On April 7, 2000, the claimant signed the fee petition.
On May 2, 2000, we received Authorization to Charge and
Collect Fee.
Payment has not yet been received.
Please add this statement to the record on the above-
referenced hearing.
Memphis, TN 38104
June 28, 2000
The Honorable E. Clay Shaw
Chair of the House Social Security Subcommittee
RE: H.R. 4633
Dear Congressman Shaw:
As vice chairman of the Social Security Section of the Federal Bar
Association I applaud the introduction of H. R. 4633 and the Federal
Bar Association wholly endorses its passage. The ``user fee'' which
took affect earlier this year will likely inhibit effective
representation in Social Security matters. The Federal Bar Association
believes that the passage of H. R. 4633 will alleviate part of the
problem in requiring Social Security to at least pay attorney fees in a
timely manner, but a better solution would be a repeal of the 6.3% user
fee totally. The Federal Bar Association acknowledges and appreciates
the effort by yourself and other members of the Subcommittee and would
be more than happy to work with the Subcommittee on any issues in the
future.
Very truly yours,
Chris A. Cornaghie
David Allen & Associates
Sacramento, CA 95819
June 14, 2000
The Honorable E. Clay Shaw, Jr., Chairman
Subcommittee on Social Security
Committee on Ways and Means
U.S. House of Representatives
Washington, D.C. 20515
Mr. Chairman and Honorable Members of the Committee, thank you for
conducting a hearing to address the manner in which the Social Security
Administration processes attorney fees and for providing this
opportunity to provide comment on this issue.
I am an attorney with David Allen & Associates, which provides
representation to disabled persons seeking Title II Social Security
Disability Insurance (SSDI) and/or Title XVI Supplemental Security
Income (SSI) benefits before the Social Security Administration. This
law firm has counseled thousands of people seeking those benefits.
In announcing the hearing on this issue, you stated, ``That the
Social Security application process is so complex people feel obliged
to hire an attorney to help them is in itself a serious problem.'' My
experience with my clients confirms the sad accuracy of your
observation. I routinely hear comments that claimants had not pursued
their applications because the Social Security representative told them
that they had no basis for their claims, or that they had given up
because they kept receiving one denial after another, or that they
declined to pursue their claims because they were treated rudely at the
Social Security field office. As a result, untold numbers of deserving
claimants never have their claims heard on the merits by an
Administrative Law Judge.
The fact that claimants for benefits from the Social Security
Administration face these types of obstacles is ironic, given that the
claims process is supposedly non-adversarial in nature. I have had many
claimants tell me that, when they mentioned to the Social Security
representative that they plan to hire an attorney, the representative
states that they do not need an attorney. Yet, persons who receive
assistance from attorneys in these claims statistically have a better
chance of success than do those claimants who are not represented. If
the claims process is non-adversarial, why should attorney
representation alter the success rate?
The answer to this question lies in part in the inherent complexity
of the Social Security system, which creates hurdles for the
unrepresented claimant. These deterrents include the following:
First, claimants must often exhaust review through the initial,
reconsideration, hearing, and Appeals Council levels before achieving
success. This multi-step process discourages the unrepresented
claimant.
Second, the claims process takes an unacceptably long period of
time. The claimant often must wait more than one year simply to have a
hearing before the Administrative Law Judge. Faced with this delay, a
significant percentage of claimants abandon their claims, or simply
start the application process anew, resulting in even further delay in
the consideration of their claims on the merits.
Third, the unrepresented claimant generally does not understand
that it is vitally important for the claimant to secure an assessment
setting forth functional limitations from the treating physician.
Without this information, the report of a consultative examiner
retained on behalf of the Social Security Administration who has seen
the claimant on only a single occasion, or worse yet, the report of a
non-treating physician who has not examined the claimant even once,
likely becomes the basis of the decision. Social Security Ruling 96-5p
provides that the treating physician's opinion is entitled to great
weight, and in some cases to controlling weight, in the evaluation of a
claim. Yet, the unrepresented claimant is generally unfamiliar with
this rule and may therefore not secure this important information.
Fourth, the Social Security Administration often does not secure
certain critical medical records. The claimant's attorney ensures that
such evidence is identified, obtained, and routed to the Social
Security Administration for proper consideration.
Fifth, many cases involve complex legal issues, such as whether
work activity during the period of disability constitutes substantial
gainful activity, whether a claimant's disability began on or before
the date on which the claimant was last insured for SSDI benefits, and
whether the claimant's impairments meet or equal the level of severity
set forth in the Listing of Impairments (20 C. F. R. Part 404, Subpart
``P,'' Appendix 1). An attorney ensures that these complicated issues
are properly developed and evaluated.
Given the multitude of ways in which a meritorious claim may be
improperly denied, attorney involvement is critical to assure that
deserving claimants receive their benefits. Nevertheless, the Ticket to
Work and Work Incentives Improvement Act of 1999 (P. L. 106-170) and
the way in which the Social Security Administration is implementing the
Act's provisions are raising barriers to attorneys representing these
claimants.
The Social Security Administration had previously required the
submission of a fee petition for approval and payment of an attorney's
fee. This requirement was eliminated by the implementation of the
process which allowed payment to an attorney under the terms of the fee
agreement between the attorney and the claimant. A condition of this
new procedure was that the attorney must agree to accept a fee no
greater than $4,000. Nevertheless, attorneys found incentive in
agreeing to this approach, since it implied that the Social Security
Administration would effectuate payment faster than in those cases in
which the fee petition is used. Of course, a corresponding benefit to
the Social Security Administration was the elimination of time spent
processing fee petitions.
By utilizing the expedited fee payment procedure, the income which
an attorney may generate in a Social Security practice is now reduced.
My practice is limited almost exclusively to Social Security disability
claims. Therefore, the fee cap on SSDI claims requires that I maintain
a substantial volume of cases for the practice to generate even a
slight profit. Public Law 106-170 has further impacted the income to
attorneys, by reducing attorney fees by a ``user fee'' of 6.3%. A case
which previously would have resulted in a fee of $4,000 now results in
a fee of $3,748. This amount, in isolation, is small. However, when the
amount is factored over an entire caseload, the amount is critical.
For attorneys whose Social Security practice represents a small
percentage of their entire caseload, the ``user fee'' will likely drive
them away from Social Security practice entirely.
This office has noticed some improvement in the processing time for
payment of attorney's fees, since the new law has been implemented.
Nevertheless, we do continue to experience ongoing problems. We are
still required to inquire repeatedly from the Office of Central
Operations when payment will be made. The average payment cycle still
remains months.
As long as the 6.3% ``user fee'' remains the law, the Social
Security Administration should be required to adhere to performance
standards for entitlement to this payment. At each stage of the claims
process, claimants are required to file their appeals to the next level
within 60 days of receipt of an unfavorable determination. If 60 days
is reasonable in that context, it should be no less reasonable to
require the Social Security Administration to pay the attorney's fee
within 60 days of its favorable determination finding the claimant
medically disabled. I ask that the Committee carefully consider the
GAO's findings, as mandated by Public Law 106-170, to determine whether
the Social Security Administration is acting appropriately for payment
of the ``user fee.''
The Committee should consider legislation to address certain flaws
in Public Law 106-170.
First, the ``user fee'' should be eliminated in its entirety. The
funds ``generated'' by the ``user fee'' have never gone toward the
purpose originally intended by the legislation. The ``user fee''
therefore has failed as a funding mechanism, a fact which I fear may
remain unknown to the vast majority of Members of Congress.
Second, the 6.3% figure is an arbitrary amount. The amount of time
to compute the attorney's fee and issue instructions for its payment is
no less in a case in which the attorney's fee is $1,000 than in a case
in which the attorney's fee is $4,000. Therefore, if the ``user fee,''
which is merely a processing fee, is to remain in place, the amount
should be limited to $25, a reasonable amount for the expense
associated with the issuance of the check for the attorney's fee.
At this time, the Committee should consider revisions to existing
law. Rather than perpetuating the ill-advised concept of the ``user
fee,'' Congress should consider creating incentives for attorneys to
represent needy claimants. The time is long overdue for instituting
withholding of attorney's fees on not only SSDI claims but also SSI
claims. Many attorneys shy away from representing indigent clients
seeking SSI benefits, or at the very least limit the number of SSI
claimants who they represent, due to the fear of inability to guarantee
payment at the favorable conclusion of the claim. The standard for a
finding of disability is no different for the SSI claimant than for the
individual seeking SSDI benefits. Why should it therefore be more
difficult for an SSI claimant to obtain an attorney than for an SSDI
claimant to do so?
Public Law 106-170 continues to be a cancer. It saps the ability of
attorneys to continue to represent claimants for Social Security
disability benefits at a time when attorney representation is critical
to success on meritorious claims. Amendments to its existing
provisions, in line with the recommendations set forth above, will
secure attorney representation for disabled Americans at a time when
that access is being seriously eroded by a well-intentioned but harmful
law.
I thank you, Mr. Chairman and Honorable Members of the Committee,
for the opportunity to provide this statement.
Very truly yours,
Roscoe L. Barrow II
Statement of Ray Cebula, Disability Law Center, Inc., Boston, MA
Chairman Shaw, Mr. Matsui, and Members of the Subcommittee, thank
you for considering these remarks during your deliberation of the
proposed withholding of attorney fees in Supplemental Security Income
(SSI) cases.
I am a Senior Staff Attorney with the Disability Law Center of
Boston, Massachusetts. In that role I am responsible for the
implementation of the statewide Disability Benefits Project which has,
since 1983, been funded to provide representation to SSI claimants
seeking disability based benefits. I have been practicing in this area
of the law for some 18 years.
I urge the committee members to reject the proposed withholding of
attorney fee in SSI cases and do so after careful thought and for
several reasons. SSI applicants are among the poorest of the poor.
Generally with minimal physical, mental and financial resources, these
individuals will still be living at more than 30% below the federal
poverty line even after securing SSI benefits. In Massachusetts,
including the state funded supplement, a disabled SSI recipient will
receive a maximum monthly award of $626.39. The average benefit paid in
Massachusetts is significantly lower. In 1998, the average SSI
award paid in Massachusetts was only $401.38.\1\ The average
retroactive award received by SSI claimants represented by the
Disability Benefits Project in 1998 was about $8000. Using the current
attorney fee formula of $4000 or 25%, whichever is less, such a
retroactive award will only produce a fee in the amount of $2000. This
is hardly sufficient to attract private bar involvement in SSI work.
---------------------------------------------------------------------------
\1\ See, SSI Recipients by State and County 1998, Social Security
Administration, Office of Policy, Office of Research, Evaluation and
Statistics, SSA Pub. No. 13-11976, July 1999.
---------------------------------------------------------------------------
SSI benefits are protected from legal process by the anti-
assignment clause contained within the Social Security Act. This clause
provides very strict protection of these needs-based, subsistence level
payments. Appropriately, benefits that are provided and needed to meet
the most basic human needs of food, clothing and shelter, should be so
well protected. Allowing an exception for attorney fees will create a
crack in this firm protection that can only grow when other special
interests determine that they require access to life sustaining
benefits.
Most importantly, the SSI program is not simply the disability
determination process that is very familiar to all advocates practicing
before the Social Security Administration. The SSI program is
controlled by very complex income and resource rules. Rules that create
an extra level of determination in order to secure the proper payment
for an SSI applicant. These income and resource rules are foreign
territory to much of the private bar who routinely deal with Title II
insurance claims having no income or resource restrictions. A large
part of my work time is taken up by the provision of technical
assistance and support to social security claimants representatives--
public and private. Income and resource issues are simply not issues
being handled by the private bar. However, these issues are intimately
involved with every SSI claim. Only through a mastery of these rules
can a representative be assured that his client is receiving the
correct amount of SSI. Living arrangements, exempt resources and in-
kind income are terms of art unique to the SSI program. Knowledge of
these terms is critical to proper and thorough representation.
Poor people have suffered a significant lack of access to our
health care system. The average SSI claimant has been treated at
emergency rooms, clinics, or ``health stops'' and rarely has a coherent
medical history. A large portion of this population suffer from
undocumented or untreated impairments as a direct result of poverty.
Health care providers are reluctant to provide medical records or
provide narrative reports knowing that these services must be provided
free of charge. An SSI claimant is unable to pay the ``going rate'' for
production of a medical narrative to support their SSI claim. These
issues make the prosecution of an SSI claim often much more difficult,
and always more time consuming, than that of a disability insurance
claim.
Frankly, there are better uses for retroactive SSI awards. Again,
SSI recipients are living well below the poverty line. When disability
occurs, the fragile life lines to which these claimants cling become
frayed. Having lost the ability to work, the often poorly educated SSI
claimant cannot rely upon private disability policies to provide
necessary income. Rent payments are missed. Debts are incurred to meet
the need for food and clothing. Medical bills remain unpaid. It is
often these basic life needs that absorb the vast majority of the
retroactive SSI dollars received by a successful claimant. Meeting
these overextended debts is a means of attempting to secure the lives
of their families and themselves.
I do not pretend that there are adequate resources to meet the
representation needs of all SSI claimants. Legal Services and
Protection & Advocacy advocates can only handle a limited number of
claims each year. However, these resources are extremely talented and
able to deal with ALL aspects of an SSI claim and not simply the
disability determination process. This situation is not unlike that
facing a disability insurance claimant in Massachusetts. There are
simply not sufficient private bar resources to handle the need. There
are very few private attorneys who handle this type of case. Those that
do are often talented and dedicated representatives. We are fortunate
to have an active coalition of social security advocates in our state.
However, together we are unable to meet the need. I do not believe that
allowing SSI fee withholding will change this situation.
As a result of these thoughts, I would encourage the Members of the
Subcommittee to reject the notion of SSI fee withholding.
Thank you for your attention and consideration.
Federal Bar Association
Washington, DC 20037-1416
June 28, 2000
Honorable Clay Shaw, Jr., Chairman
Subcommittee on Social Security
U.S. House of Representatives
B-316 Rayburn House Office Building
Washington, D.C. 20015
Dear Chairman Shaw:
Thank you for holding the hearing on June 14 on the processing of
attorney fees by the Social Security Administration. This matter is of
considerable interest to the membership of the Social Security Section
of the Federal Bar Association, and I request that this correspondence
be entered into the hearing record. The comments presented herein are
exclusively those of the Social Security Section of the FBA and do not
represent the official views of the Social Security Administration, in
whose employment I serve as an Administrative Law Judge.
As you know, the Federal Bar Association is the foremost
professional association for attorneys engaged in the practice of law
before federal administrative agencies and the federal courts. Fifteen
thousand members of the legal profession belong to the Federal Bar
Association. They are affiliated with over 100 FBA chapters across the
nation. There are also over a dozen sections organized by substantive
areas of practice such as the Social Security Section, of which I am
the Chair.
Unlike other organizations associated with Social Security
disability practice that tend to represent the narrow interests of one
specific group, the Federal Bar Association's Social Security Section
encompasses all attorneys involved in Social Security disability
adjudication. Our members include:
Attorney Representatives of claimants
Administrative Law Judges (ALJs)
Staff Attorneys at the Office of Hearings and Appeals
Attorneys at the Social Security Administration's Office
of General Counsel
U.S. Attorneys
U.S. Magistrate Judges, District Court Judges and Circuit
Court Judges
The primary interest of the FBA's Social Security Section is in the
effectiveness of the adjudicatory processes associated with hearings in
the Office of Hearings and Appeals (OHA), the appeal process at the
Appeals Council, and judicial review in the federal courts. We believe
that representation of claimants by attorneys is a positive
contribution to those processes and should be encouraged. Since the
Social Security Administration's handling of the payment of fees to
attorneys has an impact on their willingness to accept disability
cases, the matter is of considerable importance to them and the conduct
of their legal practice.
Having reviewed the testimony of all the witnesses at the
subcommittee's recent hearing, I wish to address three areas relating
to SSA's processing of attorney fee requests: 1) extension of the
withholding of fees to Supplemental Security Income (SSI) cases; 2) the
amount of the fee charged by SSA to process the fee withholding; and 3)
raising the cap in attorney fee agreements to $5000.
Extension of Fee Withholding to Supplemental Security Income (SSI)
Cases
Attorneys who practice Social Security disability law
overwhelmingly endorse the extension of withholding fees in SSI cases
for direct payment. There is no question that attorneys are reluctant
to take SSI cases due to the high risk of nonpayment for services
rendered. This is reflected in SSA's 1999 statistics at the OHA level,
which show that 83.4% of Title II claimants were represented while only
57.1% of Title XVI claimants were represented. Many attorneys simply
refuse to handle SSI cases. Those who do tend to do so out of a sense
of obligation and often in the spirit of pro bono work. Moreover, of
those attorneys who now take SSI cases, it is likely that some will
discontinue doing so, given the 6.3% reduction in the amount of fees
they collect in Title II cases where there is direct payment by SSA.
SSI claimants should not have to rely upon the collective good
conscience of a few attorneys for representation.
The reality is that nearly half of SSI claimants are unrepresented.
While Administrative Law Judges are charged with protecting the
interests of pro se claimants and do their best to meet that
obligation, it is done in the context of a very heavy caseload. ALJs
carry hundreds of cases on their dockets. The reality is that a
represented claimant, by virtue of the time, attention and expertise
that a representative can provide, has a better chance of success. This
is recognized by the Consortium for Citizens with Disabilities as
reflected in Marty Ford's recent testimony. While resources such as
legal services and pro bono attorney work are invaluable, they are
limited. As the CCD pointed out, the potential denial of benefits for
SSI claimants due to lack of experienced legal representation far
outweighs the burden of having reasonable attorney fees withheld from
their back benefits.
SSA and others oppose the extension of withholding of attorney fees
to SSI cases in large part based upon the extremely low income status
of SSI recipients. They point to the obligation and need of SSI
recipients to repay various debts incurred during the application
process such as loans for basic needs. Further, they say that
withholding of fees from past due benefits might wipe out the ability
of recipients to repay those just debts. The FBA likewise recognizes
and appreciates the financial dilemma of SSI recipients. Nonetheless,
the FBA does not understand the reluctance to view an incurred attorney
fee debt as a debt equally worthy of repayment out of an SSI
recipient's back benefits. The attorney who assisted the claimant in
obtaining the benefits has a legitimate claim on the claimant's
available assets. The bottom line is that SSI claimants are better off
if awarded benefits and the likelihood of that happening rises when
they are ably assisted by counsel. The FBA perceives no persuasive
reason to treat SSI cases differently from Title II cases vis-a-vis the
withholding of reasonable attorney fees from past due benefits.
The 6.3% Assessment Charged by SSA to Process the Attorney Fee
FBA historically has opposed the imposition of any SSA assessment
for withholding and direct payment of attorney fees from past due
benefits. The FBA on April 15, 1998, through action by its National
Council, adopted a resolution in opposition to the assessment of fees
in Social Security and SSI cases, recognizing that such fees are
``likely to severely and adversely impact the ability of claimants to
obtain legal representation.'' We communicated those views to the
Subcommittee and others in Congress prior to passage of the ``Ticket to
Work'' legislation, which established the 6.3% assessment.
Indeed, we concur with the hearing testimony of Nancy Shor, made on
behalf of NOSSCR, that it is troubling that there does not appear to be
any logical connection between the amount of the fee and the actual
cost to SSA to withhold and issue a check for attorney fees. We
understand that this is the subject of study by SSA as well as GAO, and
we urge that the results of those studies be applied in setting a
rational amount for the fee, should it be determined that a fee must
continue to be levied.
It has come to the attention of the FBA that attorneys are
increasingly trying to avoid the current 6.3% ``tax'' on their services
by waiving direct payment and filing a fee petition in lieu of a fee
agreement. It requires no study to know that approval of a fee
agreement by an ALJ takes a matter of moments and virtually no staff
time within OHA. In contrast, when a fee petition is filed, ALJ and
staff time rise dramatically--at no small cost to SSA. Yet, SSA
receives no fee for processing a fee petition if there is no direct
payment of fees. Thus, if this trend continues, the imposition of the
6.3% user fee may actually create greater costs for SSA given the
increased cost of ALJ and OHA staff time in handling fee petitions.
Attorney attempts to avoid what is viewed as a confiscatory tax on
direct payment of their fees may give new life to the cumbersome fee
petition process that the fee agreement and direct payment were
designed to avoid.
In sum, the FBA urges elimination of the user fee altogether. In
the alternative, we urge review of the user fee when the full GAO
report is completed in December. When the actual cost of processing
withholding and direct payment is ascertained, any fee should be set
based on that actual cost rather than the current 6.3% of the awarded
fee.
Finally, with respect to the linkage of payment of a fee to some
benchmark for prompt payment by SSA, the FBA considers that to be a
reasonable and desirable approach. While 30 days in some instances may
be unrealistic due to workers' compensation offsets and dependent
claims, we fully support the idea that imposition of any user fee be
tied to payment by SSA within a specific, realistic period of time.
Raising the Limit in Fee Agreements to $5,000
The FBA urges SSA to raise the cap in fee agreements to $5,000.
While this issue is not currently controlled by statute, we believe the
Subcommittee should devote renewed attention to revision of the cap. It
has been ten years since this cap was raised to the current amount of
$4000. Inflation over the last ten years would support the need for
such an increase. The reality is that with the faster processing of
claimants' cases at OHA, back benefits are not as great as they were
once likely to be. Thus, in many cases the amount of the attorney fee
is considerably less than the current $4,000 cap. As Deputy Associate
Commissioner of the Office of Hearings and Appeals William Taylor
indicated at the hearing, the average payment in 1999 in a fee
agreement was $2,555. Nonetheless, in those protracted cases where 25%
of back benefits reach $5,000, there is no reason to exclude those
cases from the fee agreement process and subject them to the cumbersome
fee petition process. ALJs can approve up to $5,000 in fees when
requested in a fee petition; there is no logical reason to limit the
amount approvable by an ALJ in a fee agreement to less than that
amount. To reduce time expended by attorneys, ALJs and OHA staff, we
urge that the cap on fees in a fee agreement be raised to $5000.
In closing, I want to thank you and the Subcommittee for your
interest in this issue and the opportunity to submit these comments for
your consideration. The Social Security Section of the Federal Bar
Association looks forward to working with you on this and future issues
relating to Social Security disability case adjudication.
Sincerely,
Kathleen McGraw, Chair
Social Security Section
Denver, CO 80204
June 22, 2000
A.L. Singleton
Chief of Staff
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, DC 20515
Re: Attorney Fees in Social Security Disability Cases
Dear Sir or Madam:
I am an attorney at law with a solo practice in Denver, Colorado. I
have been practicing for fifteen years.
I have two areas of specialization in law practice: Social Security
disability and employment law. Over the past three years I have dealt
with a business consultant specializing in small professional practices
for the purpose of advising me about ways to improve the efficiency of
my law practice. My business consultant, after reviewing all of my
records, has advised me that I should reduce the Social Security
disability portion of my law practice, because of the delays in getting
paid on Title II disability cases and the occasional, but still
significant, instances in which a client receiving Supplemental
Security Income fails to pay my attorney fee. I have followed my
advisor's recommendation and have reduced the number of Social Security
cases that I have handled over the past year. The Administration's
recent imposition of a user fee for Title II attorney fees has also
influenced my decision to take fewer Social Security cases.
Feel free to call me if you have any questions.
Very truly yours,
Thomas A. Feldman
Enclosure
cc: Congresswoman DeGette
Austin, TX 78731
June 15, 2000
Congressman E. Clay Shaw, Jr.
Chairman, Subcommittee on Social Security
Ways and Means Committee
Re: Hearing June 14: Attorney's Fees for Representatives of Social
Security Claimants
Thank you, Congressman Shaw, for recognizing that the process for
obtaining Social Security is cumbersome and costly. I have represented
claimants for over twenty-five years. During that time every effort to
simplify or improve the system has only made it worse. I have often
said that if private companies can process correspondence and payments
efficiently, then it seems exceedingly odd that our government can make
it so complicated and difficult.
A very simple solution to the problem of processing attorney's fees
is to make one check payable to the claimant and his or her
representative for the lump sum. This has been done by insurance
carriers in personal injury and worker's compensation cases for many
years. There would be less work and cost by using one check. The delays
would be reduced. In order to avoid the representative abusing the
claimant by taking more than 25%, simply require that a statement be
submitted by the representative and claimant showing the division of
the check. This too has been done by workers' compensation agencies for
many years. This one payment could cover SSI and Title II benefits
without the delay while these sums are calculated which results in
frequent errors.
The multitude of confusing letters could be reduced to one letter
explaining the payment, attorney's fees, and Medicare/Medicaid.
This would save any number of trees as well as reducing pollution,
and reducing waste in our government. Perhaps this is too simple and
easy to ever be accepted.
Mary Ellen Felps
Ginger Lanigan and Associates, Inc.
Brockton, MA 02301
June 14, 2000
A.L. Singleton, Chief of Staff
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515
Dear Chief of Staff Singleton:
I am an independent, Non-Attorney Social Security Representative.
My Offices are located in Brockton and New Bedford, Massachusetts, and
Margate, Florida. I employ 7 full time case managers; two are Bi-
Lingual. I have been in business for 5\1/2\ years. I pay every tax
imaginable. Because of my locations, many of my clients are indigent.
I feel that the federal government discriminates against me each
and every time i win a case. Because i am not a lawyer, and non-
attorney representatives do not have clout behind them, the retroactive
checks are sent to the claimant, and the claimant assumes the
responsibility of paying my fee.
Let's look at one scenario: for the most part, SSI cases mean that
the claimant has no apparent work history, is probably collecting money
from the state's welfare system, and has debts from months, if not
years, of being disabled. That person's retroactive check will first go
to pay back the state (if that person collected state benefits), and
then the remainder will go to pay off relatives and friends, etc. My
fee is long gone. I have to file court proceedings, usually reduce my
fee, and then settle for $10.00 a month payments.
Claimants who have Social Security Disability Insurance benefits
are more likely to pay my fee, although there have been numerous cases
where I have had to wait many months to be paid.
We also have instances when, inadvertently, either the Social
Security District office or the payment center enters us into the
computer as attorneys. In this case scenario, the payment center holds
our fee, sends a letter to the claimant stating that very fact. . .down
the line realizes that we are non-attorneys; then releases our fee to
the claimant, who, at that point, thinks we were already paid.
I deserve to be treated in the same manner as my adversaries. I
would gladly pay a user fee to insure that my fee was withheld from
retroactive benefits and sent directly to me.
Thank you for the opportunity to express my opinion.
Sincerely,
Ginger Lanigan
Statement of John R. Heard, Attorney at Law, San Antonio, TX
My name is John Robert Heard. I am in attorney in private
practice, and I have had the privilege of representing Social
Security Disability and Supplemental Security Income claimants
since 1976. These comments are submitted on my own behalf, and
not on behalf of any client, organization, or other person. Our
firm currently includes 5 attorneys who represent claimants in
San Antonio, the Corpus Christi area, and the Rio Grande Valley
of Texas. I appear frequently at administrative hearings at the
Social Security Administration's Office of Hearings and Appeals
in San Antonio. I would like to first address my comments from
the perspective of a former board member and chairman of the
community mental health Center in San Antonio, Bexar County,
Texas.
I served on the board of the Bexar County MHMR Center from
1980-1990. Our community mental health center is the primary
service provider for underprivileged people who suffer from
problems of mental disability, mental retardation, and
substance abuse. In the decade that I served on the community
mental health center board, I observed the tremendous lack of
resources to which our clients were subjected, despite the best
efforts of our agency. Unfortunately, our agency was woefully
under funded, and we were only able to reach a relatively small
percentage of those individuals in greatest need for our
services, who invariably had no other resource to turn to.
In the early 1980's, as my experience on the board grew,
parallel to my experience as a lawyer representing Social
Security and Supplemental Security Income claimants, I observed
a terrible irony: Our underserved client population would have
been able to access a range of medical services by obtaining
Supplemental Security Income and the Medicaid benefits which
accompany SSI, but they lacked the wherewithal and resources to
pursue their claim for benefits. Although the Bexar County
Legal Aid does an excellent job with limited resources, it
frequently had to shut off access to SSI clients, sometimes for
months at a time, in order to prevent an administrative
overload within the Bexar County Legal Aid. At the same time,
the claimants were unable to obtain representation from private
sector lawyers, since there is no withholding of attorneys fees
in Supplemental Security Income claims, and the cases were
regarded as difficult and unprofitable. Because the community
MHMR center lacked the resources and the expertise necessary to
assist our clients in obtaining SSI benefits, these clients
remained without access to ongoing medical care or income, and
frequently fell out of contact with the MHMR center, as they
relocated from place to place based on the availability of
sympathetic relatives, or the necessity of seeking public
shelter.
This situation continues today, and the lack of resources
to assist the chronically mentally ill in obtaining their
Supplemental Security Income benefits is particularly acute,
since the private sector is understandably reluctant to assist
these very difficult clients when there is no guarantee of fee
payment. Nevertheless, some lawyers, including lawyers in our
firm, accept these cases understanding that there will be times
when they are not paid, viewing these situations as a de facto
pro bono service. However, even that limited availability of
representation of SSI claimants in the private sector is now
threatened by the 6.3% user fee imposed on attorneys fees in
Title II cases.
The Impact of the User Fee on SSI Representation
Office overhead for our firm runs at approximately 75% of
gross receipts. Accordingly, a 6.3% reduction in our gross
income from Title II represents a 25% reduction in our profits,
before taxes. When the user fee hit our law firm, we had no
choice but to look for areas in which we could recoup this very
significant loss. We could not layoff employees without
reducing the quality of our services. Virtually all of our
other expenses are also fixed. Therefore, we have been forced
to decline to accept cases which are marginal, and in which the
fee is not guaranteed. Specifically, we have found it necessary
to take fewer Supplemental Security Income cases, including
especially children's SSI cases. We are especially saddened by
this later consequence, since our firm is one the few private
law firms in our part of Texas which will take children's SSI
claims.
Supplemental Security Income cases generally produce a
smaller back award of benefits than Social Security Disability
(Title II) cases for two reasons: They are only retroactive to
the first day of the first full month after the month in which
the claimant applies, and the amount of SSI monthly payments is
typically smaller than the average amount of payments under the
Social Security Disability program. Accordingly, as our firm
looks forward to the future we have no choice but to conclude
that, unless the Congress changes the existing situation, we
will be forced to decrease the size of our operations through
attrition, and focus our energies on Title II claims where
there is a greater likelihood of being awarded, and actually
being paid, a reasonable fee.
The Present Bill
The passage of HR 4633 is an important first step in the
direction of restoring equity and fairness to the social
security claimant and her representative. It is difficult to
understand how the Social Security Administration can argue
that it should be entitled to $252.00 for preparing a check
(assuming a $4,000.00 fee), without even being required to
forward that check to the attorney in a timely manner!
Apparently, the Social Security Administration feels that it
should be allowed to further increase its revenue by having the
advantage of the float on the lawyer's hard earned fees. This
situation is outrageous and unconscionable, and should be
remedied immediately.
The protestations of the Social Security Administration
regarding the inability to pay fees in 30 days are incongruous,
and are certainly inconsistent with the procedures employed by
other parts of the Federal Government. If the Social Security
Administration cannot design a system which will allow payment
of attorneys fees within a 30 day window, then the user fee
should be eliminated entirely until such time as the Social
Security Administration can design and implement procedures
that will allow it to pay fees in a timely manner.
Other Essential Changes
The Congress should immediately extend fee withholding to
Supplemental Security Income (Title XVI) cases. As previously
stated, Supplemental Security Income cases are less attractive
to the private sector attorney, since they produce smaller
fees. Moreover, the claimants are frequently homeless, and
suffer mental and emotional problems more frequently than Title
II claimants.
The plight of SSI claimants seeking representation is well
demonstrated by the recent case of Maldonado v. Apfel, 55 F.
Supp 2d 296 (S.D.N.Y. 1999). This case involved children
seeking SSI benefits, who were represented by their parents.
However, the parents represented their children not by choice,
but from necessity. As described in the Maldonado decision:
Throughout these administrative proceedings, Ms. Maldonado
represented Rogelio. This was not, however, due to a lack of
effort in trying to find an attorney. Soon after the SSA sent
Ms. Maldonado the October 13, 1995 letter containing the list
of groups that provide legal assistance to individuals seeking
SSI benefits, she and her husband began to try to find a lawyer
to represent Rogelio and ``contacted every organization on the
list in Manhattan and the Bronx.'' (Maldonado Aff. para.para.
5-6). None of these lawyers offered Ms. Maldonado so much as an
initial appointment. (Id. para. 6). Ms. Maldonado then sought
the services of private lawyers who advertised that they took
disability cases. (Id.). Some replied that they did not take
children's cases, while others said that they might take a
child's case, but only if the family paid a retainer of $1,000.
(Id.). The family, however, was not financially able to pay the
requested retainer and thus Ms. Maldonado continued to
represent her son. (Id.). Maldonado, at 299.
The other Plaintiff in the case, Ms. Olavarria, encountered
similar obstacles. Unable to obtain legal representation for
her child, each mother pursued the matter to Federal Court,
where they the encountered the objection of the Government that
they were not competent to represent their children, since they
were not attorneys. Ms. Olavarria continued to seek counsel:
After receiving a letter from the government dated February
24, 1999, which explained the government's position that Ms.
Olavarria may not represent her son in these proceedings
without counsel, the Court scheduled a conference for March 19,
1999. Ms. Olavarria attempted to obtain counsel to attend the
conference. (Olavarria Aff. 8-9). Both Bronx Legal Services
and the Legal Aid Society informed her that no lawyers were
available to accompany her to the conference. (Id. para. 9).
She also contacted approximately five or six other legal aid
offices, all of which informed plaintiff that they did not
handle children's SSI cases. (Id.). Ultimately, the Court's Pro
Se Office arranged for lawyers with Legal Services for the
Elderly and Bronx Legal Services to attend the conference. At
the conference, these organizations agreed to represent
plaintiff for the limited purpose of determining whether she
could continue to represent her son without an attorney.
Maldonado, at 301.
The attempts of these mothers to obtain legal services for
their children are is typical of the hurdles faced by
Supplemental Security Income claimants. Many adult SSI
claimants, suffering from physical and mental disabilities,
lack the persistence of Mrs. Maldonado and Ms. Olavarria to
seek legal services as diligently as they did. Accordingly,
after an initial denial or two by a private sector attorney or
a legal aid office, SSI claimants often simply give up, and
accept their fate, returning to the back streets and the back
wards.
The Maldonado court ultimately allowed Mrs. Maldonado and
Ms. Olavarria to proceed, pro se, on behalf of their children.
The court grounded its finding, in substantial part, on the
unavailability of counsel for children's SSI cases. The court
held:
Unfortunately, these social security appeals often ``are
not very attractive cases'' to non-volunteer private attorneys.
(Tr. at 36). As plaintiffs' counsel explained: ``In general,
attorneys in private practice, including members of the Social
Security bar, will not accept children's SSI cases.'' [FN13]
(See Baker Aff. para. 4). Further, legal services organizations
cannot be expected to accept all of the children's SSI cases.
Due to lack of funding, the loss of staff positions, and other
responsibilities, most organizations are operating at or near
capacity. (*307 See id. para.para. 5-7). See also Bruce A.
Green, Foreword, Rationing Lawyers: Ethical and Professional
Issues in the Delivery of Legal Services to Low-Income Clients,
67 Fordham L.Rev. 1713, 1713 (1999) (``It is . . . commonly
understood that the present level of government and private
funding for legal services for low-income persons is woefully
inadequate to meet the pressing legal need.''). Maldonado, 306-
307.
The holding in Maldonado was recently accepted by the 5th
Circuit in the case of Harris v. Apfel, 209 F3d. 413 (5th Cir.
2000). The court in Harris agreed with the policy
considerations articulated in the Maldonado case, and found
that parents should be allowed to represent their children pro
se in appeals from administrative SSI decisions, in order to
avoid jeopardizing the child's statutory right to judicial
review.
Conclusion
The unavailability of counsel for children and adults in
Supplemental Security Income appeals is well known throughout
the legal and social service communities. In order for legal
services to be available to Supplemental Security Income
claimants, it is imperative that withholding of attorneys fees
be extended to Supplemental Security Income cases. In addition,
the 6.3% user fee should be eliminated, and replaced by a
reasonable fee that more accurately reflects the actual cost
for withholding attorneys fees and certifying payment to the
attorney. Congress should act immediately to pass HR 4633, and
to extend withholding of attorneys fees to Supplemental
Security Income cases, in order to remedy the longstanding
injustice suffered by our mentally and physically disabled
citizens who are entitled to Supplemental Security Income
assistance but who cannot receive it without legal
representation.
Sacramento, CA 95821
June 21, 2000
A.L. Singleton
Chief of Staff
Committee on Ways and Means
U.S. House of Representatives
102 Longworth House Office Building
Washington, D.C. 20515
RE: Subcommittee Hearing on Processing of Attorney's Fees by the Social
Security Administration
Dear Mr. Singleton:
Although I am a dedicated attorney with a small practice, I am
becoming unwilling to represent S.S.I. recipients because Social
Security has made it so hard to collect a fee. Not only are S.S.I.
claimants an unstable population, on the periphery of society, but SSA
now requires that they receive their retroactive benefit in six-month
installments. Furthermore, SSA does not issue a fee approval on a
concurrent (or Title XVI and Title II) case until all the work is
completed on the Title II portion, which often takes many months. For
all these reasons, I, along with many other attorneys, am reluctant to
represent S.S.I. claimants.
But attorneys are necessary to Social Security and to the judges.
Attorneys weed out undeserving cases and gather evidence and medical
opinions; they also lighten the load for the state agencies.
A 6.3% user's fee applied to Title XVI cases to allow those fees to
be automatically withheld would ensure that attorneys take these cases
and therefore would ensure that the poor get the help they need.
It is to be noted that the S.S.I. payments are made out of the
general fund, not out of money the claimant has earned. It is public
assistance. The law says that the lawyer's fee is contingent and to be
paid out of retroactive benefits. When the lawyer has performed this
public service, it is mete and right that the lawyer be paid out of the
public fund the claimant is receiving.
Sincerely,
Joan Jennings
Statement of Joel F. Friedman, Jerome, Gibson, Stewart, Friedman,
Stevenson & Engle, P.C., Phoenix, AZ
Chairman Shaw and members of the Social Security
Subcommittee, please accept these comments for inclusion in the
public record of the hearing that took place on Wednesday, June
14, 2000, on Processing of Attorney Fees by the Social Security
Administration.
My name is Joel F Friedman and I am an attorney in private
practice with a small law firm in Phoenix, Arizona. I have been
representing Social Security Disability Insurance Benefits
(DIB) and Supplemental Security Income (SSI) claimants before
District and Field offices, and the Office of Hearings and
Appeals, primarily in the Phoenix metropolitan area, for nearly
18 years. I have been actively involved in the legislative
process as well, I have periodically represented the interests
of a group of private Social Security attorneys in the Phoenix
area, and I am presently a member of the Board of Directors and
national Secretary of the National Organization of Social
Security Claimants Representatives (NOSSCR). I am attaching to
this statement a copy of my curriculum vitae.
I am writing to you as an attorney in private practice
concerned about the directions taken recently by the Social
Security Administration (SSA) on matters involving the payment
of benefits to successful claimants for DIB and SSI, which then
is coordinated with payment of my attorneys' fees. I would
appreciate your consideration of the following:
The representation and claims process
I represent individual adult and child claimants for
exclusively DIB and SSI benefits, as well as concurrent claims
in which benefits are paid under the two programs subject to
the maximum SSI benefit amount. I meet directly with and
interview potential clients, explaining how the system works,
including the agency review procedures, likely time frames for
claim processing, and medical requirements of proving a
``disability.'' I will also advise potential clients if I
consider their claim improbable, but I sometimes undertake even
a borderline case if it is the only realistic opportunity for
the individual to qualify for DIB (e.g., coverage based on work
history is expiring or has expired).
When I accept a client, I generally assist personally with
preparation of required Social Security questionnaires and
forms. My staff supports Social Security and state disability
determination agency offices with gathering medical records and
reports. We will advance to most clients the cost of
``purchasing'' treating source records, narrative reports, or
even consultative evaluations. These services are provided to
both DIB and SSI claimants. In an SSI case, though, I must
consider the risk of not recovering individual case expenses as
well as the chance of not being paid for my time (attorneys'
fees), and we may instead request that the state agency obtain
medical proofs, which generally delays processing of the case.
The recent implementation of a 6.3 percent charge against my
DIB case fees has now made the same potential for not
recovering the advanced expenses a more substantial factor, and
we more frequently ask the SSA office where the claim is being
processed to obtain those documents for which we receive what
we deem to be excessive billings.
I am available for all of my clients, for all of their
medical or legal problems. We refer clients to specific medical
care providers if possible; we recommend other lawyers for
legal matters we cannot provide direct help with; and we refer
clients to public or private agencies for assistance, including
with possible vocational rehabilitation, while the Social
Security claim is pending. We do not charge extra for ancillary
services unless part of a separate claim (e.g., workers'
compensation, personal injury) we can assist with, and often we
informally reduce fees in one or both cases.
Comments you have received from certain individuals as a
part of this legislative hearing process suggest SSI claimants
are unique in the disability system, and that their special
vulnerability somehow separates them from a ``typical'' DIB
claimant. I can provide you only with anecdotal information
from my own practice, which I can assure you demonstrates that
there is no such distinction. The DIB claimant's loss of
employment due to illness or injury is actually likely to be
financially more difficult, as that individual and his or her
family is unexpectedly and suddenly no longer able to support a
lifestyle established by regular, often substantial, income
that simply cannot be and is not replaced. Private disability
and workers compensation benefits replace no more than a
fraction of actual earnings, and a spouse who has not been
working does not just re-enter the work force at the same
income level as a skilled trade or craftsman, for example, who
has been the family's primary provider.
The loss of employment due to disability creates very real
hardship, savings may be limited or not realistically available
(e.g., pension funds to which there is no reasonable access),
and it is my understanding that a significant percentage of
personal bankruptcy filings are attributable to this
phenomenon. The amount of household and personal expenses
incurred while working, expecting continued employment, are no
less real than the expenses described of the SSI claimant. The
DIB claimant is equally, if not more, likely than the SSI
claimant to owe both pre-and post-disability debts, and
contentions that SSI claimants are indebted for ``food and
shelter while awaiting'' SSA's decision ignores that non-
working individuals probably have qualified for other state or
federal benefits, such as Food Stamps, Aid for Families with
Dependent Children(AFDC)--Temporary Aid for Needy Families
(TANF), subsidized or sheltered housing, and/or welfare--
general assistance.
The Committee should not be persuaded that there is a
legitimate distinction to be made in the need for quality legal
representation merely because a claimant applies for DIB or
SSI. The formerly employed and now disabled are in fact more
likely to have more substantial financial pressures than the
never-employed, and that is recognized by arbitrary disparities
in benefits amounts. In similar fashion, the Committee should
reject unsubstantiated and illogical claims that particular
segments of the disabled community, more than other essentially
similarly situated demographic groups, require more
``protection'' from the very individuals who represent the
claimant's best and greatest interests--attorneys who accept
these cases with no significant financial contribution from or
risk to the claimant.
Commentators demanding continued distinction between DIB
and SSI claimants on the basis of relative ``vulnerability''
also disregard agency statistics about the nature of DIB
claimants' alleged disabilities, data that have been available
for many years. In the 10 year period from 1985 to 1995, for
example, ``the typical new'' recipient of DIB changed from `` a
male over 50 years old with either a cardiovascular or
musculoskeletal impairment'' to someone ``younger and mentally
impaired.'' May 23, 1995 Statement/testimony of Jane L. Ross,
Director--Income Security Issues; Health, Education, and Human
Services Division, General Accounting Office, (GAO) Before the
Subcommittee on Social Security, ``DISABILITY INSURANCE:
Broader Management Focus Needed to better Control Caseload'' at
p. 9 (Appendix A). The recent distribution of disabling
conditions differs materially in DIB and SSI claims
populations--almost twice as many SSI as DIB claims are
approved due either to mental retardation or another mental
disorder. Annual Statistical Supplement 1999, Social Security
Bulletin (SSI--58.6 percent; DIB--31.9 percent)(Appendix B).
The statistics appear at least to be compatible with the
premise that lack of a consistent work history that would
qualify a claimant for DIB, relegating the claimant to SSI, is
more characteristic of chronic psychiatric patients than those
who become disabled due to sudden injury or even gradual
illness.
The Social Security system's complications and
intransigencies dictate that every claimant have access to
qualified legal representatives. The SSA has historical data,
moreover, demonstrating a correlation with increased
representation of claimants by attorneys and institution of a
direct fee payment mechanism. The same study by the SSA
revealed that DIB claimants wanting attorney representation
were able to obtain legal counsel, ostensibly corresponding
again to the direct payment of fees from claimants' back
benefits. July 1988 ``Report to Congress: Attorney Fees Under
Title II of the Social Security Act;'' Department of Health and
Human Service, Social Security Administration, Office of
Hearings and Appeals, at pp. 8-9 & 13 (Appendix C).
The continued access to a variety and choice of qualified,
and quality, legal representatives for disability benefits
claimants, whether Title II DIB or Title XVI SSI, should remain
a paramount interest of the Committee and the SSA--it is an
unequivocal interest of the disabled community. The Committee
must understand the details and nuances of legal representation
in Social Security cases, which properly is considered unique
within the law, and make its decisions based on complete and
accurate information. DIB and SSI claimants are not very
different at all, and they are entitled to equal access to
legal assistance.
The representative's fee payment process
Once the reasons why legal representation is important in
Social Security cases are understood and appreciated, the
significance of a direct attorney fee payment process becomes
clearer. There are valid justifications for distinctions
between attorneys and non-attorneys, including the professional
and economic accountability of an attorney who negligently or
intentionally harms a client. The SSA has data, moreover,
showing that claimants, when offered a choice, prefer lawyers
to non-lawyers. July 1988 ``Report to Congress: Attorney Fees
Under Title II of the Social Security Act'' at p. 14 (Appendix
C). The Committee should thus focus its present deliberations
only on the statutory mechanism for payment of fees to
attorneys.
The present system is theoretically acceptable and is not
fatally flawed except in its implementation by the SSA. The
principal excuse you have been offered for delays in payment of
claimants' retroactive benefits and attorneys' fees is the need
to develop additional information, such as receipt of workers'
compensation benefits, after medical approval of a claim. See
June 14, 2000 Hearing Testimony--Written Comments of William C.
Taylor, J.D., Deputy Associate Commissioner for Hearings and
Appeals, at p. 7; Barbara D. Bovbjerg, Associate Director--
Education, Workforce, and Income Security Issues, Health,
Education, and Human Services Division, General Accounting
Office (GAO), at pp. 5-6 & 10). The workers' compensation
benefits question is an excuse, however, and not a valid
explanation.
The problem is not that the SSA does not have or cannot
obtain non-medical eligibility/entitlement information at or
prior to processing of back benefits. The failure of the system
is that such information provided to the agency with the
medical evidence is just plain ignored. It is the policy and
practice of my office to submit workers' compensation benefits
details, including from the insurance carrier, to the
Administrative Law Judge (ALJ) hearing the disability portion
of a case. We also solicit from outside attorneys, or provide
from within our office, information about creditable attorneys'
fees, litigation costs, and medical expenses that will reduce
the amount that lawfully can be set off against the DIB.
That information is, and generally can be, a part of the
OHA--SSA file well in advance of back benefits processing, but
it does no good. We are continually asked to submit the same
information to other processing offices, sometimes on several
occasions. We now transmit the information via facsimile only
to a specific individual, to assure it is actually received by
a human being and not merely filed away, again, never to be
reviewed.
The system failure is that the SSA rarely, if ever,
maintains any semblance of file folder integrity, and processes
the same case through different stages, at different physical
locations, without coordinating what has already been submitted
and is a part of that file folder. There is no legitimate
reason why back benefits payments cannot be segregated by
standard percentages and/or fixed dollar amounts. These
questions you are addressing now--should we encourage lawyers
to represent Social Security claimants, do we discriminate
against SSI claimants who want a lawyer, how do we assure a
supply of qualified and quality lawyers to represent disabled
Social Security claimants (many of whom have severe psychiatric
disorders), is withholding and direct payment of attorney fees
or a two-party check an acceptable method--have been recurrent
themes in ongoing deliberations about the Social Security
system, and the SSA has chosen not to establish a computer
system that performs basic, necessary accounting functions.
My office already has a computerized accounting program
that takes client workers' compensation payments received from
several insurance companies and automatically deducts the same
fee and cost recovery amounts each time a check is processed.
The fee deduction can be programmed as a percentage or a fixed
amount, and cost recovery deductions are generally a fixed
amount. It is not difficult to modify the distribution of money
if factors change, and we have only two part-time bookkeepers
performing these same functions for nearly one thousand clients
every month. The numbers of payments we process is certainly
different than the SSA's workload, but it is safe to assume
that if a small business in Phoenix, Arizona can provide these
services (and others as well) to almost 1,000 clients with
approximately 250 person-hours per month, the SSA can provide
equivalent service to many more disability benefits recipients
with the vastly greater resources at its disposal.
You have been told it would be difficult, at best, to
incorporate into SSI cases the same type of benefits and
attorneys' fee processing that we currently have in DIB claims.
That again is an artificial and circular rationalization--SSI
claims have historically been processed differently than DIB
cases so we must continue to do so regardless of enhanced
technology and changes in claimant population demographics that
no longer justify continuation of inherently inefficient
procedures. If SSI and DIB case processing were coordinated,
the SSA, claimants, and legal representatives would benefit
from economies of scale and centralization of the process. The
same justification for all final administrative reviews being
processed at one Appeals Council seems to be equally applicable
in benefits processing, and historical inertia and the cost of
repairing it should be rejected as reasons to leave two
different, both inefficient and ineffective, DIB and SSI
systems in place.
The same accountability that sets lawyers apart from non-
lawyers is sufficient reason to consider realistically the
implementation of a two-party check system that would expedite
payment of both back benefits to the claimant and fees to the
attorney. The claimants and their attorneys would be paid at
the same time, and claimants, or representative payees when
there is a question about the claimant's competence with
financial matters, are able to ascertain if the amount charged
is the same amount that would have been previously authorized,
in writing. The SSA would also be available as an oversight
agency to respond to and investigate those cases in which the
claimant has additional questions not answered satisfactorily
by the attorney. The instances in which disputes require
intervention are likely to be extremely rare, a much smaller
burden on the agency's resources than the current system.
There is no logical or valid reason to maintain the current
distinction between DIB and SSI fee payment processes, and the
complaint that SSI claimants are more financially vulnerable or
needy is unwarranted. If a claimant is denied either type of
benefits because they are not able to obtain desired legal
counsel, there simply is no money to repay any debt. When more
than 58 percent of SSI disability claims are approved because
the claimant has a mental disorder (including mental
retardation), Annual Statistical Supplement 1999, Social
Security Bulletin (Appendix C), the need for qualified, and
quality, legal representation that will in fact protect all of
the claimant's interests becomes indisputable.
I thank this Committee for the opportunity to address the
concerns you have demonstrated by the legislative hearing
process, by submitting written comments. I would be pleased to
respond to any other questions you may have during your
deliberations. Thank you.
Joel F. Friedman
[Attachments are being retained in the Committee files.]
Law Offices of Barbara B. Comerford, P.A.
Ridgewood, NJ 07451-5107
June 9, 2000
The Honorable Marge Roukema
United States Congress
1200 East Ridgewood Ave
Ridgewood, New Jersey 07450
Re: House Ways and Means Subcommittee on Social Security
Dear Congresswoman Roukema:
I have written you before on social security topics. I feel
particularly moved to write you at this time for two reasons: the House
Ways and Means Subcommittee on Social Security is in the midst of
conducting hearings on the issue of attorney fees, and my office is
relocating directly across the atrium from yours at the above address
as of July 1, 2000. Please understand that the issue of attorney fees
impacts whether thousands of New Jersey residents will be able to
secure competent legal counsel in social security cases, so I implore
you to support the cause of disability lawyers on this issue. The
National Organization of Social Security Claimants Representatives,
which is based in Midland Park, New Jersey, has, I am sure, collected
letters from practitioners around the nation who are as concerned as me
about this issue.
I have been concentrating my practice in the area of Social
Security law for roughly fifteen years. I have written extensively on
the topic and have lectured around the country on the issue to other
lawyers, lay persons, Social Security officials and members of the
bench. Indeed, I have been asked to author a book on the topic by
American Jurisprudence Trials. I also chair the Bergen County Bar
Association Social Security Committee.
Historically, the fee generating cases subsidize my pro bono work
which is considerable. Most of my pro bono work is done on behalf of
disabled children. Indeed, I trained attorneys throughout the state at
the request of the American Bar Association and the New Jersey Bar
Association on SSI childhood disability cases in the aftermath of the
Welfare Reform Act.
I have provided a brief glimpse into my professional background to
explain why I would be sickened to give up representing social security
disability clients. But like many of my colleagues, I may not be able
to afford to continue my disability practice if the law regarding
attorney fees is not changed.
Under the Ticket to Work and Work Incentive Improvement Act of
1999, attorney fees were reduced 6.3%, as a ``user fee.'' Not only must
we suffer delays of several months from the time we win the case until
the time we are paid, but to ensure payment at all, I must have one
employee do NOTHING but call the attorney payment center to nag them
into mailing my fees. I have an added complication in that I changed my
primary business address two years ago, and in spite of the fact that I
notified Social Security of my new address in every case, my attorney
fees were still forwarded to the wrong address. In roughly twenty-nine
(29) cases, I have not been paid in cases I have won since 1999. The
level of incompetence is beyond exaggeration. And for this, my fee has
been taxed 6.3%.
An increase in the present $4000.00 limit (and it is frequently
much less because benefits are CAPPED at $4,000.00) is long overdue.
The best practitioners will not be able to adequately represent clients
if the fees remain so low, and if the delays, which the Act was
intended to correct, continue. My clients are the weakest and most
vulnerable in our society. I love my work, and they need my help.
Social Security has statistics on the success rates of unrepresented
claimants. It is abysmal. While I agree with Congressman Shaw that the
process should be so easy for individuals with disabilities that they
no longer need attorneys, the truth is that without experienced
lawyers, disabled individuals cannot succeed under the present system.
Sincerely,
Barbara B. Comerford
Pekoe, Reed, Wright & Associates
Winter Park, FL 32789
June 14, 2000
A.L. Singleton
Chief of Staff
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington D.C. 20515
Dear Mr. Singleton,
I would like to submit this written statement to you in reference
to the Hearing which is scheduled to take place today, June 14, 2000,
concerning the processing of Attorney Fees by the Social Security
Administration. I have a recommendation and suggestion which I believe
can mitigate the negative response which I trust you are receiving from
Attorneys affected by the cost recovery provisions.
I am a former Social Security Administration employee who worked
for the Administration for approximately 20 years. In 1992, I resigned
and started my own company which represents individuals applying for
Social Security benefits. I am not an Attorney
As you know, individuals seeking Social Security benefits may
choose to have Attorneys or other individuals represent them in their
claims. The Commissioner of Social Security through regulation
establishes a limit on the amount of the representation fee that may be
charged and approves each fee charged by any representative.
The payment of fees to Attorneys is accomplished directly by the
Social Security Administration after a fee has been approved. However,
the payment of fees to Non-attorneys is not made by the Social Security
Administration after a fee has been approved. For Non-attorneys,
although the same approval process must occur, payments must be secured
by Non-attorneys from the clients.
This inequity is clearly unfair and unnecessary. Since the same
exact approval process by the Commissioner of Social Security must take
place for Attorneys and Non-attorneys alike, the direct payment of any
approved fees should similarly take place.
I would suggest that rather than eliminate the recoupment fee
enacted through the Ticket to Work and Work Incentives Improvement Act
of 1999 (P.L. 106-170) which requires the Commissioner to cover the
costs of paying Attorney fees directly to Attorneys, that you include
direct payment of approved Non-attorney fees. Inclusion of Non-
attorneys will establish equity and fairness and will increase the
revenue obtained from the recoupment process. This increased revenue
from Non-attorneys can be used to reduce the actual percentage of
recovery cost from 6.3% to a lower figure which will be more palatable
to Attorneys.
I thank you for considering my recommendations and hope that you
can establish them. Both the public and those representating them will
be benefitted by these changes. If you have any questions, please feel
free to contact me at 407-647-8533.
Respectfully,
Ron Pekoe
Ward White & Associates
Holiday, FL 34690-0549
June 27, 2000
A.L. Singleton,
Chief of Staff,
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office building
Washington, D.C. 20515
Re: Technical changes to Title II,406 and Title XVI, 1383 of the Social
Security Act
Dear Chairman Shaw,
I wish to thank you for allowing me the opportunity to explain the
disparity in the method of payment of fees between an attorney and a
non-attorney representative in Social Security disability cases.
As presently enacted, neither the provisions of Title II nor Title
XVI provides for withholding of an ``attorney's fee'' for non-attorney
representatives. This inequity results in losses of approximately 10%
of my firm's gross revenues. It results in a loss of revenue to the
government given the current user fee legislation, and the lack of a
unified fee process creates internal havoc for Social Security
Administration personnel mandating a system within a system creating
additional harm and delays for both claimants and representatives. The
proposed changes will increase the amount of revenue the federal
government receives through the user fee, and they will insure SSA
treat both attorney and non-attorney representatives equally by
withholding the ``'attorney's fee'' due to the representative if the
claimant is successful in obtaining disability benefits. (The technical
changes are included in the addendum.)
Title II is an insurance policy. Enacted in 1935, it provided,
among other things, disability benefits to insured individuals
irrespective of financial need. From 1935 until 1965, Title II
contained no express provision authorizing an award of attorney's tees
to a claimant's counsel. In 1965, the Fifth Circuit Court of Appeals in
Celebreeze v. Sparks, 342 F2d 286(1965), held that 42 U S.C. 405(g)
implicitly authorized federal district courts to order the payment of
attorney's fees out of past due benefits. The court's rationale was
that where a statute confers upon a federal court full judicial power
to handle litigation before it, it must be presumed, absent any
indication to the contrary, that the power allows it to provide for the
payment of attorney's fees from past due benefits recovered by the
claimant in the litigation.
In 1965, Congress codified the Sparks decision by amending 42
U.S.C. 406 by adding section (b)(1). This new subsection provided for
the withholding of past due benefits to pay attorney's fees incurred in
judicial litigation under Title II.
In 1968, Congress amended section 406(a) of Title II authorizing
the now Commissioner of Social Security to withhold a portion of past-
due benefits to pay attorney's fees incurred in administrative
proceedings under Title II.
Non-attorney representatives were not active in this arena of the
law prior to the mid-1970's. Thus, the issue of whether non-attorney
representatives should be paid in the same manner as attorneys was not
before the courts, nor Congress. Therefore non-attorney representatives
were not in the class entitled to receive direct payment from past-due
benefits.
The proposed changes to section 406 are merely technical in nature
and recognize the contribution those non-attorney representatives
whether as individuals, or members of a partnership or corporation make
in representing uninformed and/or indigent claimants. As non-attorney
representatives and attorney representatives' develop, prepare and
argue their cases in an identical manner they should be paid in an
identical manner. These technical changes shall be effective on the day
of enactment and the regulations amended within 60 days from the date
of enactment Title XVI is a welfare program. Enacted in 1972, it
provides supplemental security income benefits to financially needy
disabled individuals regardless of their insured status.
In Bowen v. Galbreath, 485 U.S. 74, 108 S.Ct. 892, 99 L..Ed. 2d 68
(1988), the Supreme Court referred to the Committee reports and quoted
them as stating to withhold attorney fees from past-due benefits would
be contrary to the purpose of the program.
This view has recently changed. In 1996, Congress enacted the
Personal Responsibi1ity and Work Opportunity Reconciliation Act of
1996, Public Law 104-193, enacted on August 22, 1996. Section 221
provides that large past-due benefits payab1e to SSI recipients should
be paid in installments not in a lump sum. This legislative provision
reflects a change in Congress' view that withholding benefits from
Title XVI recipients wi11 not cause greater hardship than withholding
from Title II recipients. The Act also provides for a waiver provision
if hardship is found.
Recognizing both the change in Congressional view and that non-
attorney representatives assure claimant's complete development and
preparation of their cases, a good opportunity to secure their benefits
despite complex medical-legal issues, and regulations, attorney and
non-attorney representatives should be paid in the same method whether
a claim is filed under Title II or Title XVI. If these proposed changes
become legislation the federal government will benefit from increased
revenues through the user fee and claimants will have access to
competent and qualified representatives.
At the present time, SSA is required to expend time and personnel
on tracking non-attorney representative fees. Social Security personnel
are required to review all cases awarding benefits. Cases involving
non-attorney representatives are coded differently because direct
payment by SSA to the non-attorney representative is not allowed. Often
times the payment center incorrectly codes files resulting in a
withholding of 25% of claimant's benefits. In these cases, the non-
attorney representative is required to make numerous telephone calls
and write to SSA in an effort to have the incorrectly withheld funds
released to the claimant. There are also the cases where SSA withholds
and sends the non-attorney representative a government check for 25% of
the claimant's past due benefits. In this case, the non-attorney
representative is required to send the government's check back to SSA
and request that a new check be re-issued to the claimant. In
requesting, a new check be issued to the claimant, the non-attorney
representative will make no less than three phone calls to the payment
center to follow up on the matter until the claimant has received all
past due benefits. In other instances government employees are
uninformed with respect to the differences in the withholding
procedures for attorneys and non-attorneys. Uninformed government
employees advise claimants the government is withholding the fee
resulting in the claimant spending all past due benefits and no longer
having the resources to pay the non-attorney for the professional
services rendered in securing claimant's entitlement to benefits.
Thousands of dollars become un-collectable with claimant's laying the
blame directly on information received from the Social Security
Administration workers. This can lead to additional litigation against
a claimant who has endured a tremendous amount of hardship in securing
disability benefits. If the proposed technical amendments were adopted,
they would provide positive benefits to SSA. Employees would not have
to track non-attorney representative fees and could be assigned other
duties making the operation more efficient. The government would
benefit generally from the additional revenue collected from the non-
attorney user fee. Finally the government would not be risking
liability from non-attorney representatives who have lost revenue due
to misinformation provided to claimants from agency employees.
Another positive benefit would be in the area of oversight over all
representatives. In select instances there are individuals who do not
subscribe to the highest standards of representation of Social Security
and SSI claimants'. These non-professional individuals (attorney's and
non-attorney's alike) cast a shadow over all conscientious
professionals who represent Social Security disability claimants. In
adopting the proposed technical changes Social Security would retain a
greater level of control over all representatives in the administrative
disability arena.
Respectfully yours,
A. Scott Flexer
ADDENDUM
The proposed technical changes to the Social Security Act
are as follows:
Title II
42 U.S.C. 406 (a)(1) after the phrase ``if the claimant was
represented by an attorney.'' insert the following: or non-
attorney representative whether an individual, partnership or
corporation. This technical change shall be effective on the
day of enactment and the regulations amended within 60 days
from the date of enactment.
After the phrase ``a reasonable fee to compensate such
attorney'' insert the following ``or non-attorney
representative whether an individual, partnership or
corporation'' This technical change shall be effective on the
date of enactment and the regulations amended within 60 days
from the date of enactment.
406 (4)(A) after the phrase ``the person representing the
claimant is an attorney'' insert the following: or non-attorney
representative whether an individual, partnership or
corporation.
After the phrase ``to such attorney'' insert the
following:or non-attorney representative whether an individual,
partnership or corporation. This technical change shall be
effective on the day of enactment and the regulations amended
within 60 days from the date of enactment.
406 (4)(B) after the phrase ``to the attorney'' insert the
following: or non-attorney representative whether an
individual, partnership or corporation. This technical change
shall be effective on the day of enactment and the regulations
amended within 60 days from the date of enactment.
406 (c) This section is re-titled: Notification of Options
for Obtaining Representation. After the phrase ``options for
obtaining attorney'' insert or non-attorney representation
whether an individual, partnership or corporation.
Title XVI
U.S.C. 1383 (d)(2)(A) Substitute the following: The
provisions of section 406(a) of this title shall apply to this
part to the same extent as they apply in the case of Subchapter
II.
1383(d)(2)(B) after the phrase ``options for obtaining
attorneys'' insert ``or non-attorney representative whether an
individual, partnership or corporation.''
Chicago, IL 60707-4429
June 22, 2000
Congressman E. Clay Shaw
Subcommittee on Social Security
Of the Committee on Ways and means
C/o A.L. Singleton, Chief of Staff,
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515
Re: Fairness of 6.3% User Fee
Dear Congressman E. Clay Shaw,
To paraphrase Ronald Reagan, if you want less of something, you tax
it. The 6.3% user fee does not ensure an adequate method of securing
attorney's fees in Social Security claims. Indeed, attorneys were very
dissatisfied with the process before the fee; they are naturally more
dissatisfied with the process since they must now pay for it. Since the
fee has made no difference in the unsatisfactory process of fee
withholding, it can only be concluded that the user fee is no more than
a tax. A fee for a service of no use to the payer is not a user fee, it
is a tax. As Ronald Reagan's statement suggests, this tax will serve to
ensure less representation of Social Security claimants.
I have included a current list of the attorney's fees that have
been withheld from claimants, but which have not been paid to me. You
will note that I am currently owed over $100,000.00, interest free,
with some fees owed for as long as two years. This amount has held
relatively steady for at least the past five years. This list would be
longer, except that I must pay a secretary to nag the national payment
centers on a daily basis. Otherwise, many fees would not be paid at
all.
I have also enclosed sample Notices of Award. Please note that the
payment centers continue to include the 15-day payment delay language
in the notices, even while collecting the user fees. Since the payment
centers do not diary future actions, a 15-day delay can often be a 15-
month delay, or such delay until we call to goad them into processing
payment. You will also note that sometimes they do not withhold the
fee, or they do not withhold a sufficient amount. Requiring attorneys
to pay for such a process is not fair, since the process does not lead
to a fair payment of attorney's fees.
Unfortunately, this tax, or user fee is timed to discourage
attorney's seeking to represent Social Security claimants, while other
factors already provide a strong disincentive to this practice. We all
are thankful for a good economy and for the faster processing times of
Social Security claims. Indeed, the two are related. Because of the
high demand for labor, employers are more tolerant of employees with
disabilities. There are thus fewer people claiming Social Security
disability, because a job pays better. As a result, there are fewer
claimants, a smaller backlog of unadjudicated claims, and faster
processing times. Faster processing times means smaller past due
benefit amounts. The practical effect on attorneys with Social Security
practices is that there are fewer clients and lower fees.
Attorneys who are considering whether to continue in the practice
of representing Social Security claimants are discouraged from staying
with the practice for several reasons. Their incomes are substantially
less because of fewer clients and lower attorney's fees. Their expenses
are higher as well. They have always had to pay clerical staff to track
the payment of their fees. They have always had to tolerate accounts
receivable with the government stretching fee payments many months, and
even years, interest free. Now, the government not only uses their
money interest free for prolonged periods of time, but also charges
them a 6.3% fee for the privilege of being abused. If you were an
attorney in such circumstances, in the midst of prosperity in other
areas of the law, and in many areas outside the law, you might very
well decide to feed your family in greener pastures.
The common wisdom is that in two years the baby boomers will impact
the Social Security system by increasing the volume of claims. No doubt
this is true, but of much greater significance would be a downturn in
the economy. Higher unemployment rates will increase the disability
claim rate more than the effect of aging baby boomers. The combined
effect will again lead to long delays in processing and poor decisions
by hard pressed bureaucrats. The need for attorneys specializing in the
representation of Social Security claimants will again be significant.
Unfortunately, those attorneys will no longer be available, until
supply again catches up with demand. Until that time, people may well
ask why the government had chosen to tax away their right to competent
legal representation.
Sincerely,
Robert G. White
[Attachments are being retained in the Committee files.]
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