Stanville, a tiny town in eastern Kentucky, seems an unlikely place for a multimillion-dollar empire. Yet for decades, an unscrupulous lawyer named Eric Christopher Conn has been working the Social Security disability system, securing benefits for even the most undeserving of clients, according to a new report from the Senate Committee on Homeland Security and Government Affairs.
The report describes a lucrative scheme that involved not only Conn but also a disability judge and several doctors with bad reputations — all of whom may have profited substantially.
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Conn founded his law practice in 1993 in redneck Kentucky, running it out of a brown trailer that once belonged to his parents. “Only two rooms in the trailer were open, because we couldn’t afford to change the carpet in the other room,” Conn claims on his website. Through widespread advertising, he not only attracted disability clients but also established himself as a regional celebrity, his face plastered on billboards across Kentucky and West Virginia. The tagline: “He gets the job done.”
Conn’s marketing tactics were certainly attention-getting. He was reportedly the first lawyer to produce a 3-D TV commercial advertising his firm. Troops of “Conn Hotties” appear at local events, his name emblazoned across their chests and Mardi Gras beads looped around their necks, and he has employed “Obama Girl” Amber Lee Ettinger and a former Miss Kentucky, among others, to appear in his ads. The Wall Street Journal has reported that Conn “often brings an inflatable replica of himself to events.” And the parking lot of his office — which now consists of several connected mobile homes — contains the second-largest seated statue of Abraham Lincoln in the world, a 19-foot behemoth that had to be installed by crane.
The flashy marketing worked, and Conn reached the pinnacle of his shady success in 2010, when he became one of the three highest-paid disability lawyers in the nation, collecting more than $3.9 million in payments for legal work from the Social Security Administration.
Legal representatives for disability claimants are generally paid only when benefits are approved — and the lawyer or advocate then gets a significant portion of the initial payment directly from the SSA. In the first six months of 2013, such “claimant representatives” received $64.2 million from the SSA. So lawyers like Conn have a strong financial incentive to get their cases approved, regardless of their actual merit.
But when Conn pushed potentially undeserving cases through the system, he wasn’t working alone. According to the report, he collaborated with David B. Daugherty, an administrative-law judge who heard disability cases for the SSA’s Huntington, W.Va., regional office. The report alleges that the two men developed a system to streamline approval of Conn’s cases.
The report also notes some suspicious accounting. Conn’s law firm regularly withdrew large sums of “petty cash” — between November 2005 and May 2011, a total of $616,500. Furthermore, the report notes that from 2003 to 2011, Daugherty’s bank account shows $69,800 in cash deposits, “the source of which is unexplained in the judge’s financial-disclosure forms.” Daugherty’s daughter also was found to have had $26,200 in cash deposits.
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Daugherty began working for the Social Security Administration in 1990, and by several accounts was a terrible employee with a reputation for prodigally awarding benefits, according to the Senate report.
Fellow judges described Daugherty to the Senate committee as “intellectually lazy” and “a spoiled little boy who grew up to become a judge.” Beginning in the late 1990s, reports had emerged that Daugherty was violating agency policy, fudging on his time sheets, and collecting pay for time he hadn’t worked. “According to a number of staff, it was a running joke that if you were looking for Judge Daugherty, you should not look in his office,” the report notes.
However, Daugherty somehow found the time to decide more cases than almost any other disability judge in the United States. In 2010, for example, he heard 1,276 cases, awarding benefits in all but four. And the Huntington office valued judges who could move cases and reduce the ever-looming backlog.
The Senate report excerpts an assessment of the situation offered by one of Daugherty’s colleagues, a fellow judge in the Huntington office, in 2002:
It appears the primary reason that no [disciplinary] action has been taken is because Judge Daugherty puts out the largest number of cases in the Office. . . . He grants, or finds an individual disabled and entitled to permanent disability benefits, on many cases without ever seeing the individual claimant at a hearing. When he does have hearings, the vast majority of such hearings are held in less than 10 minutes, hardly enough time to evaluate any individual properly. His “numbers” therefore make the administration look good.
In 2008, the SSA put increased pressure on judges to clear more cases. Some judges have responded by spending less time examining the cases and awarding benefits more easily, a process Florida’s Judge Larry Butler has termed “paying down the backlog.”
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Noting Judge Daugherty’s proclivity for awarding disability benefits, the report suggests that Conn began to seek him out. Huntington’s chief judge, Charlie Andrus, had said that Conn was “suspiciously available when [Judge Daugherty] was available, but suspiciously unavailable” when another judge was assigned.
In 2001, Andrus created a rotation system, which divided Conn’s cases equally among the office’s judges. But as the Senate report notes, “in effect, [this system] created a separate track for Mr. Conn’s cases giving them preference over older cases represented by other attorneys or claimant representatives.”
Still, that system wasn’t particularly effective in limiting the Daugherty-Conn relationship. Then in 2003, the SSA switched to an electronic case-management system. Daugherty began logging on and assigning Conn’s cases to himself, a practice that led to repeated complaints from his colleagues, the committee reports.
Furthermore, the report says, Conn worked with the judge to develop a “DB List,” named after the first two initials of David B. Daugherty. According to the report, from June 2006 to July 2010, Daugherty would call Conn’s office, providing him with a list of prospective beneficiaries he would like to approve. The judge would then tell Conn what sort of medical opinion he needed to award benefits (either physical or mental assessments).
Conn got the medical opinions requested on the DB List by using doctors he had sought out himself, many of whom “had histories of malpractice allegations, disciplinary problems, and even had a license revoked in another state,” the Senate report says. Though the SSA cannot directly use doctors with suspended or revoked licenses, their medical opinions can be considered if they’re brought by disability claimants or their attorneys. Some former employees of Conn’s told the Senate committee that Conn had used the Internet to search for doctors with bad records, and then actively recruited them.
For example, Dr. Syed Ikramuddin, one of the physicians Conn used, had his license suspended in Kentucky in 1994, after the Kentucky Board of Medical Licensure discovered that he had performed a tonsillectomy on a 42-year-old man, which was unnecessary in the first place, and which he botched. “The patient died six days later from cardiac arrest due to left arterial tonsillar hemorrhage and secondary shock,” the Senate committee noted. “Dr. Ikramuddin inflicted a wound during the surgery that resulted in postoperative bleeding. He then failed to properly manage the bleeding, which resulted in hypovolemic shock and the patient’s death.” The board had also discovered that Ikramuddin had unnecessarily removed part of a ten-year-old girl’s breast for a biopsy, a “procedure [that] was not necessary or even appropriate,” and the girl “would never develop a normal breast as a result of the operation,” the report notes.
Frederic Huffnagle, the doctor Conn used most often, also had a bad history. The report states:
In his first ten years of practice, Dr. Huffnagle settled nine malpractice suits, had his staff privileges revoked by at least one hospital, and provided false statements on his application for staff privileges at another hospital. . . . Dr. Huffnagle [later] garnered several monetary fines and had his license revoked in one state for providing false answers on applications for his medical licenses.
Despite their medical history, Conn’s preferred doctors were compensated generously for the opinions they wrote for the disability claimants he represented before Daugherty. It’s with good reason that such physicians are often referred to as “whore doctors” within the SSA.
Huffnagle, for example, received $979,782 from Conn between January 2006 and September 2010 (Huffnagle died the following month). In a six-year period, Conn paid out almost $2 million to five doctors for medical evaluations for his clients. Many of these claimants were examined at Conn’s office, the cursory appointments often lasting only minutes. And in numerous cases, the medical opinions submitted to Daugherty were worded virtually identically.
Daugherty would then rubber-stamp his approval, awarding benefits to hundreds of claimants represented by Conn’s firm. The report notes that “when writing his decisions, Judge Daugherty appeared to rely solely on this attorney-bought medical opinion to award disability benefits. Not only did he do this nearly 100 percent of the time for Mr. Conn’s clients, but in the decisions reviewed by the Committee he would routinely ignore all of the other evidence in the file, appearing to give it no weight at all.”
In total, 1,823 claimants moved through the DB List, earning Conn more than $4.508 million between June 2006 and July 2010.
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Daugherty’s high approval rate on Conn’s cases inevitably garnered attention, and in 2011, the Wall Street Journal’s Damian Paletta wrote an article about it. According to the Senate report, the article prompted increased scrutiny and drove Daugherty and Conn to cover up their dealings.
According to the report, the two men began communicating by “burner” disposable phones, and the disability firm shredded about 26,000 pounds of documents after a discussion with the SSA’s Office of the Inspector General. The report also notes that the Huntington Office of Disability Adjudication and Review bought four paper shredders and may have destroyed pertinent documents as well.
Furthermore, the Senate report suggests that Huntington chief judge Andrus worked with Conn’s office to target an SSA employee they believed to be the whistleblower. In a signed statement, Andrus claims he had a conversation with Conn, and he “was not happy with Sarah Carver,” a worker at the Huntington office who he believed had met with the Wall Street Journal.
“I had mentioned that she was probably not performing time and attendance while [working at home]; that generally it was very difficult to do anything,” Andrus said in a signed statement. “She couldn’t be disciplined unless there was a video sent to her supervisor. Eric Conn said he’d be willing to hire a private investigator to check. Then I got real stupid and said that sounds like an idea.”
According to the report, Andrus recruited a subordinate, Sandra Nease, who did not get along with Carver, to call one of Conn’s employees, notifying her whenever Carver planned to work at home. But after several attempts over the ensuing months, Conn was unable to catch Carver on tape doing anything inappropriate.
So, the report says, “a secondary plan was hatched simply to film Ms. Carver during non-work hours and then use a fabricated video to assert she was violating agency rules during work hours. . . . To make it appear as if it was being taped on one of Ms. Carver’s flex-days, the employee held up a newspaper with the same date in view of the camera. To further the deception, he then played a recording of a National Public Radio show from the same day.” The doctored video showed Carver driving her son around, shopping, and visiting a law office — all activities conducted on her day off, but framed to look as if they were done during work hours. The video was sent to the director of Carver’s office.
The video apparently didn’t result in punitive action against Carver, but Senate committee staffers talked with Nease about the incident. According to the report, Andrus said that was “when it dawned on me how incredibly stupid this had been.”
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These are only the most pertinent details revealed in the Senate report, but they provide a valuable insight into what has gone wrong with the disability program.
The revelations have prompted some changes. Only a week after Paletta’s article ran in the Wall Street Journal, Daugherty was put on administrative leave, and less than two months later, he retired from the SSA altogether. Likewise, Andrus was removed from his position as chief judge, though he was permitted to remain at the Huntington office. Last month, SSA put him on administrative leave as well. Conn, however, has continued to represent disability claimants, though the Kentucky Bar Association reported this week that it will review the allegations from the Senate committee report.
With the SSA’s disability trust fund on track to be exhausted by 2016, stories like this become all the more alarming. The Conn-Daugherty collaboration might be particularly juicy, but the practices they used are not necessarily uncommon; a Senate report released in 2012 found that in one-fourth of the cases reviewed, disability benefits had been awarded despite insufficient evidence that they were merited.
Widespread fraud and abuse is a serious drain on the system, and a reckoning is fast approaching.
— Jillian Kay Melchior is a Thomas L. Rhodes Fellow for the Franklin Center for Government and Public Integrity.