Monthly Archives: May 2012

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Dueling Visions of the Social Security Disability Adjudicatory System

The Social Security Administration’s administrative appeals system is touted as one of largest administrative judicial systems in the world.  No one claims it is one of the best.  Professor Richard Pierce, writing in the Cato Institute’s Regulation magazine, proclaims that it is seriously broken, and he has suggestions for how to fix it.  One might say radical suggestions.  Dubin and Rains, writing an Issue Brief for the American Constitution Society, take issue with Pierce, rebutting his assertions and defending the basic system as it is, warts and all.  One might believe that publications of the Cato Institute and the American Constitution Society would be hopelessly biased, and of course they do represent different views of the American polity, but to read these two pieces, whatever your political inclinations, will inform you about one of the most important issues in administrative law – how to deal with a mass administrative justice system that seems to be running amok.

To establish that the system is broken, Pierce provides statistics on the increase in disability determinations, the total cost involved in paying for disabled workers, and the role that pain and other non-objective causes of disability play in the increase in disability findings.  Pierce’s theme is that the use of administrative law judges and formal adjudication to re-decide what professionals determined on the basis of paper records is responsible for the breakdown, because their use is needlessly inefficient, results in non-uniform determinations, is skewed in favor of granting benefits, and is unconstitutional to boot.  Why use formal hearing adjudication for what is basically a medical determination?  Pierce suggests that the justification is to allow ALJs to assess the credibility of the claimants on the basis of their demeanor, but he then cites to an important law review article, Olin Wellborn, Demeanor, 76 Cornell L. Rev. 1075 (1991), that concludes that empirical evidence suggests that one cannot determine truthfulness (or falsity) on the basis of demeanor.  Ipso Facto: we don’t need formal adjudications for disability determinations.  The fact that there are wide disparities between ALJs in the outcomes of cases suggests that the hearings are not accurate determinations of the truth.  Moreover, under the current system, the claimant, usually represented by counsel, appears before an ALJ who, according to judicial decisions, is supposed to aid the claimant in making his case, but there is no one to represent the “other side.”  This hopelessly skews the system.  Finally, Pierce argues from the recent case of Free Enterprise Fund v. Public Company Accounting Oversight Board, 130 S.Ct. 3138 (2010) that having ALJs decide these cases is unconstitutional because they can only be removed for cause by persons who also can only be removed for cause, violating the prohibition announced in that case on limiting the President’s ability to remove an officer by creating a double for-cause removal system.  Although he provides several possible responses to the problem, his apparently preferred suggestion is simply to eliminate the ALJ review altogether, using the funds saved to review the continued eligibility of current beneficiaries.

Dubin and Rains first take on Pierce’s statistics, and while many of their critiques seem on the mark, such as the fact that as the population ages we would expect more people to become disabled, they cannot hide the fact that the number of disability beneficiaries has grown tremendously.  They then argue that the ALJ adjudicatory hearing has nothing to do with the growth in beneficiaries.  The hearings are not primarily about demeanor, nor are they merely repeats of what was in the paper files.  As a de novo determination, there is often new evidence; the claimant’s counsel is able to present the facts in a better way than the unassisted forms considered by the bureaucrats before; and the claimant himself can explain and answer questions left open in the paper file.  In short, the ALJ hearing does provide greater accuracy in outcomes than the paper review.  The disparity between ALJs in outcomes is simply the bell curve in operation with the vast majority of ALJs having rates of finding disability around the agency decisional norm.  Finally, Dubin and Rains attack Pierce’s claim of unconstitutionality.  ALJs, they maintain, are simply not “officers” for constitutional purposes and therefore are not subject to the double for-cause prohibition found in Free Enterprise Fund, noting that in that case the Court referred to ALJs as “agency employees.”  Pierce had argued that the Social Security ALJs were officers because they made final decisions for the agency; that is, their finding of disability was not subject to any further review.  However, as Dubin and Rains point out, that is not really true.  The Social Security Appeals Council can, and occasionally does, review on its own motion findings of disability, and any denial of disability by an ALJ can be appealed to the Council, so ALJs do not actually make the final decision for the agency either for or against disability.  Professor Pierce would respond, I am sure, that technically that may be true, but as a practical matter ALJ decisions almost invariably are the final decision of the agency at least with respect to findings of disability.

Dubin and Rains’ article is more heavily footnoted, and it is the (currently) last word, but despite their often convincing argumentation and authorities, its impact really is to rebut Pierce’s suggestion to eliminate the ALJ review altogether, a suggestion as likely to be adopted as a suggestion to eliminate the filibuster.  What is valuable about these articles, which really need to be read together, is to portray the difficulty of improving a system that involves millions of people and billions of dollars and yet is badly backlogged with a high variation in decisions by different ALJs.  In addition, the discussion of the constitutionality of ALJs is academically valuable, for sooner or later some court will have to address the issue, as Justice Breyer in his dissent in Free Enterprise Fund predicted.