The Senate's chief investigative committee on Monday will release a report laying out a major scheme to bilk Social Security's disability system, accusing a small-town Kentucky lawyer of colluding with a judge to approve bogus cases, in a scheme that appears to expose major holes in how Social Security polices itself.
In a detailed report being released Monday in conjunction with a hearing on the subject, the investigators lay out a stunning scheme that involved the lawyer, Eric C. Conn, Administrative Law Judge David B. Daugherty, dishonest doctors, disposable phones, shredded documents and millions of dollars in profits — taken straight from taxpayers through the Social Security system.
"Mr. Conn and Judge Daugherty had collaborated on a scheme that enabled the judge to approve, in assembly-line fashion, hundreds of clients for disability benefits using manufactured medical evidence," the investigators concluded.
The Social Security disability system has come under increasing scrutiny as the number of persons earning disability has jumped faster than normal population and workforce growth, to reach 8.8 million beneficiaries in 2012.
And several high-profile disability fraud cases have contributed to concerns.
In August, federal authorities announced they had arrested 75 people in Puerto Rico on charges of bilking the disability system of millions of dollars. The authorities used a sting operation to nail the fraud ring.
Mr. Conn's case came to the attention of investigators after a 2011 Wall Street Journal article identified Judge Daugherty as having a prolific docket for disability cases, and approving an extraordinarily high number of them.
Both the lawyer and the judge are slated to appear before the Senate Homeland Security and Governmental Affairs Committee on Monday to answer questions raised by the report.
Sen. Tom Coburn, ranking Republican on the committee, had his staff perform the investigation, along with Sen. Carl Levin, chairman of the permanent subcommittee on investigations, and Sen. John McCain, the subcommittee's ranking Republican.
CBS's "60 Minutes" program interviewed Mr. Conn for its program that aired Sunday night, and asked him about the accusations. Mr. Conn demurred.
"I'm not normally a shy person, but I think it's probably best I speak in the legal realm rather than here. I know you all have come a long way, and I don't mean to be inhospitable but I just think it's probably best right now," Mr. Conn told the program.
According to the Louisville Courier-Journal, Mr. Conn tried to get appointed as to the Social Security Advisory Board two years ago, going so far as to hire bluegrass legend Ralph Stanley and Internet sensation Obama Girl Amber Lee Ettinger to cut a video to promote his candidacy.
Disability case lawyers cannot ask clients for fees. Instead they are paid 25 percent of past-due benefits for clients who are awarded disability, up to a maximum of $6,000 per case. Lawyers can ask clients to pay costs of the case, such as medical records.
The report said Mr. Conn earned over $4.5 million in fees from cases sent specifically to Judge Daugherty. In its best month, the Conn law firm earned $162,853.98 pushing 49 clients through the judge.
After the Wall Street Journal article the Social Security Administration once again began assigning cases randomly in its Huntington, W.Va., office where Mr. Conn and Mr. Daugherty practiced.
Judge Daugherty was placed on administration leave and retired soon after.
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