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Other Eric Conn-type Social Security scams operating, whistleblowers say

September 10, 2018

The man behind the biggest Social Security fraud in American history was given another 15 years in prison last week, for a total of 27 years behind bars but those who helped expose his con say the legal penalties shouldn’t obscure the very real problems they say led to the fraud, and that remain unfixed even now.

Eric C. Conn ran a disability scam whose size could easily top $1 billion in bogus applications, relying on a network of pliant doctors and corrupt judges to get thousands of people approved on flimsy evidence.

Former Sen. Tom Coburn, the Oklahoma Republican who led the investigation that exposed the fraud, said there is no doubt in his mind that similar scams are operating.

“Oh, sure, it’s going on. Nothing’s stopped,” he told The Washington Times.

The whistleblowers who brought the scam to the light of day agreed. If anything, they said, the next major con “will be infinitely worse.”

“Social Security has failed to make any substantive changes that will prevent fraud of this kind from reoccurring,” said Jennifer Griffith, who, along with Sarah Carver, reported the scam, faced nasty retaliation and are still pushing for reforms.

Conn’s scam shocked Washington with the sheer scope of the fraud and his brazenness in pulling it off.

He advertised himself as Mr. Social Security, soliciting customers to take advantage of the program’s disability benefit in downtrodden areas of eastern Kentucky and West Virginia. Catchy commercials and a crew of scantily clad “Conn’s Hotties” were his hallmark along with an uncanny ability to get applications approved.

It turns out there is a good reason for that.

Conn had a group of doctors and a psychologist on the take, writing out bogus medical evaluations for his clients. Conn then submitted the applications, and David B. Daugherty, a Social Security administrative law judge also on the take, would reassign the cases to himself and rubber-stamp them.

The government initially flagged some 1,800 cases as bogus, totaling $600 million in potential bad benefits from Social Security, Medicare and Medicaid. Since then, thousands more cases have been called into question, sending the potential costs soaring past $1 billion, according to congressional investigators.

Mr. Coburn and his investigators blew the lid off the scam in 2013 in a lengthy report and a dramatic hearing that exposed myriad problems in the disability system.

Several of the doctors Conn used had suspended or revoked medical licenses in one state but because they were practicing in another state, it wasn’t a disqualifier.

Daugherty, the main judge in Conn’s pay, was able to go into the computer system and grab Conn’s cases for himself, ensuring they could be approved and he could collect.

Because of the incentive structure of disability, which pays lawyers to help people file claims, Conn earned nearly $5 million in fees from the original 1,800 bogus cases alone some of which he paid to the doctors and judges he had in his pocket.

Conn reached a plea deal in early 2017, accepting a 12-year sentence in exchange for testifying against his cronies. But just before he was slated to be sentenced, and to testify in a trial against one of his doctors in June 2017, he cut off his ankle monitoring device and fled south across the border, aided by a longtime henchman.

Authorities tracked him down in December at a Pizza Hut in Honduras. On Friday, he was slapped with another 15 years for a total of 27 years in prison. He was also ordered to pay $72.6 million in restitution for the scam.

“This case should serve as a strong warning to those who think they can steal from our taxpayer-funded programs and escape liability: Our law enforcement partners will find you, and you will be brought to justice,” said Assistant Attorney General Brian A. Benczkowski.

Thousands of Conn clients are still battling for their benefits, arguing that even if he submitted bogus applications that took shortcuts, it doesn’t mean they weren’t deserving. After months of delay, the government has finally made arrangements for Conn’s old files to be reviewed to help any of those cases.

Conn has spent the months since being returned to the U.S. detailing the extent of his scam, which involved other pliant judges beyond Daugherty. The picture he paints is of judges desperate for payoffs, either in cash or gifts.

The Social Security Administration declined to make an official available for an interview but provided a lengthy statement insisting it has made changes to curtail chances for a repeat con.

The agency said it closed a “loophole” that allowed Daugherty to assign cases to himself, chided employees to try to stick by the usual case rotation and “augmented” ethics training for judges.

The agency also said emerging data tools and moving to electronic files can help sniff out “anomalies.”

Social Security now checks doctors who perform disability screenings to make sure they are not on Medicare and Medicaid’s banned list.

That is an improvement, said Peter Tyler, a senior policy analyst at the Project on Government Oversight though he said they should also be checking other lists to see who has had medical licenses revoked or suspended.

“If a physician is licensed to practice in Maryland, but lost his/her license in Virginia for some relevant reason, you would think this would be a red flag for SSA as far as being qualified, or at least could trigger an inquiry,” Mr. Tyler said.

Social Security said it did finalize a rule last month that imposes duties on people like Conn who file disability cases for others, requiring them to disclose their relationship with any of the medical professionals who perform evaluations in a case.

But Ms. Griffith and Ms. Carver, the whistleblowers who have left the agency, said other changes haven’t helped. They said the Social Security Administration has compartmentalized access, making it less likely that someone would have the information to spot all the pieces of the scam, as they did.

An executive order signed by President Trump this year would make it easier to fire employees who blow the whistle, Ms. Griffith said.

“Sarah and I endured years of retaliation that the Social Security Administration still refuses to acknowledge,” she said. “If Social Security truly cared about preventing fraud of this kind from reoccurring, they would not have forced us from our employment, tried for over 5 years to conceal these crimes and would have made measurable changes that equip their employees with the resources they need to not only report fraud but also value the input from those that do.”

Mr. Coburn, meanwhile, said Social Security must conduct audits of its judges. The latest statistics show a huge range of approvals, with some judges approving 15 percent of cases and others granting approval in a staggering 95 percent of cases.

Mr. Coburn, who studied the issue as the chief Republican investigative senator for years, figured perhaps only 50 or 60 percent of people getting disability are fully deserving. The others, he said, are taking it as an extra benefit.

Since Mr. Coburn’s departure, the issue has attracted less attention on Capitol Hill. The subcommittee that led the 2013 investigation has not returned to the matter.

The Government Accountability Office said in a 2017 report that the Social Security Administration appears to be committed to combating fraud but hasn’t conducted a full-risk analysis and doesn’t know where to put its efforts.

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