Eastern Kentucky lawyer earned millions in fees through disability 'scheme,' investigators say

 

Lexington Herald-Leader

An Eastern Kentucky lawyer has earned $22.7 million in attorney's fees from the Social Security Administration since 2001, in part through a lucrative "scheme" to defraud the agency's disability benefits programs, a U.S. Senate committee said in a report released Monday.

Eric C. Conn, 53, a Floyd County lawyer who calls himself "Mr. Social Security" in his colorful billboard and television advertisements, rigged medical records and steered hundreds of his check-seeking clients to an administrative law judge who rushed their cases through the system, according to a two-year investigation by the Senate Committee on Homeland Security and Governmental Affairs.

The committee met Monday to hear from Conn and others, including two women who said they tried to blow the whistle on preferential treatment that Conn received from Judge David Daugherty at the Social Security Administration's regional Office of Disability Adjudication and Review in Huntington, W.Va.

It was "a mass collusion between a judge and an attorney," testified Sarah Carver, a case technician at the agency's Huntington office.

Conn briefly sat before the committee but declined to give a statement or answer questions.

"I respectfully assert my constitutional right to not testify here today, sir," Conn said.

Also subpoenaed to appear, Daugherty was a no-show.

From 2005 to 2011, Daugherty approved the disability appeals that Conn requested in 3,143 cases and never denied one of his appeals, compared to a 60 percent approval rate for disability appeals nationwide. Conn was paid a portion of the monetary award given to each of his clients. Daugherty's career and income were boosted as he gained a reputation as one of his agency's fastest judges.

Daugherty and Conn's law office communicated about upcoming cases, and when Conn's clients randomly were assigned to other judges, Daugherty used his computer to reassign them to himself, Senate investigators wrote in their report. Daugherty sped Conn's cases to approval, sometimes not even holding the required hearing. Colleagues knew what the judge was doing but did not stop him, as evidenced by interviews and internal emails.

"The Eric Conn situation is going to bite this office in the butt one day," Carver, the Social Security case technician, warned her bosses by email at one point.

Testifying to the Senate committee on Monday, Carver said her superiors — including her office's chief judge, Charlie Andrus — teamed up with Conn to harass her after she started drawing attention to the situation. Among other things, a private investigator was hired to tail Carver and try to videotape her in incriminating acts, she testified.

"Shouldn't happen in America," Sen. John McCain, R-Ariz., told Carver.

Carver and a former Social Security Administration co-worker, Jennifer Griffith, filed a federal lawsuit against Conn and Daugherty in 2011 under the False Claims Act, which allows whistle blowers to get a portion of money recovered from cases in which the federal government was defrauded. That case is pending.

Daugherty retired in 2011, shortly after the Wall Street Journal detailed his relationship with Conn in a lengthy story.

In a review of Daugherty's personal bank records, Senate investigators said they identified $69,800 in cash deposits from recent years that the judge would not discuss with them and that could not easily be explained by his salary and his family's other assets and sources of income, which he was required as a public official to disclose.

Conn, who was an unsuccessful Democratic candidate for the state House of Representatives in 1998, continues to practice law. He pleaded guilty in September to a misdemeanor campaign-finance violation for attempting to funnel money to Kentucky Supreme Court Justice Will T. Scott. In 2002, he resigned from his practice before the U.S. Court of Appeals for Veterans Claims during an investigation into allegations of professional misconduct.

Social Security Administration managers did not attend Monday's Senate hearing despite a formal request to testify. In a prepared statement to the Lexington Herald-Leader, an agency spokesman wrote: "We share the concerns raised in the report. We have cooperated fully with any investigation into the matter. Also, we have undertaken various internal measures to address any established wrongdoing."

According to the Senate report, Conn relied on a few hand-picked doctors — nicknamed "whore doctors" at the Social Security Administration — who would sign and date medical reports he prepared ahead of time for his clients, rather than perform a legitimate exam and determine on their own if a client was too disabled to work.

Conn preferred to hire doctors who had been sanctioned for ethics problems, searching the Internet for names linked to malpractice lawsuits, disciplinary actions or license revocations in other states, two of Conn's former employees told Senate investigators and the committee.

"He called them whore doctors," former Conn employee Melinda Martin told senators. "He said they would be cheaper and easier to deal with."

Conn paid his favorite doctor, Dr. Frederic Huffnagle of Bowling Green, $979,782 in consulting fees from 2006 until Huffnagle's death in 2010, investigators wrote. Doctors typically met Conn's clients for 10 to 20 minutes each in a "medical suite" at his law office before signing off on the documents necessary to support their disability claims, investigators wrote.

Three of Conn's other medical professionals were named in the report and brought before the committee: A. Bradley Adkins, a Pikeville psychologist; Dr. David Herr of West Union, Ohio; and Dr. Srinivas Ammisetty of Stanville.

Herr asserted his Fifth Amendment right to not testify. Adkins and Ammisetty were grilled by senators about medical reports they were paid to sign for Conn but denied intentional wrongdoing.

"It was a mistake to do it," Adkins said.

"Was it unethical to do it?" asked Sen. Heidi Heitkamp, D-North Dakota.

"Looking back on it, knowing now what they used for, yes," Adkins said. "At the time, it did not seem unethical to me."

Conn "used his law practice to exploit key vulnerabilities in a critical safety net program and became wealthy in the process," investigators concluded in their report. "By 2011, 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 federal government created two programs to support people who are too disabled to work: Supplemental Security Income, which comes from the U.S. Treasury, and Social Security Disability Insurance, which is funded by Social Security taxes. The programs have exploded in size, particularly after federal welfare reform in 1996 limited access to traditional benefits. Disability programs are expected to cost more than $200 billion this fiscal year.

In some Eastern Kentucky counties where jobs are scarce, 10 to 20 percent of the population draws at least one disability check, compared to about 5 percent of the U.S. population.

At Monday's hearing, senators blamed the Social Security Administration for a lack of oversight and for pressuring administrative law judges to push appeals through the pipeline regardless of whether they have merit.

"In just two years, the Social Security Disability Trust Fund could be depleted," said Sen. Tom Coburn, R-Okla.

"That means millions of disabled Americans will face benefit cuts while every American could see an increase in their payroll taxes," Coburn said. "That is unacceptable. What is also outrageous, as this report details, is how well-heeled and well-connected lawyers, doctors and judges have gamed the system for their own benefit. Every bogus claim made on behalf of someone who is not truly disabled robs taxpayers and denies or delays benefits for someone who is truly disabled."

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