Court Error Abuse of Discretion.

Byline: Derek Hawkins

7th Circuit Court of Appeals

Case Name: Tyler N. Jaxson v. Andrew Saul

Case No.: 19-3011; 19-3125

Officials: EASTERBROOK, HAMILTON, and SCUDDER, Circuit Judges.

Focus: Court Error Abuse of Discretion

David Daugherty, an administrative law judge hearing disability-benefits applications for the Social Security Administration, supplemented his salary by taking bribes. Eric Conn, who represented many claimants, paid Daugherty $400 per favorable decision; Conn himself received $5,000 or more per case out of the benefits that Daugherty awarded to Conn's clients. Four physicians, including Frederic Huffnagle, submitted evaluations to support Daugherty's decisions. Daugherty told Conn what kind of evidence he wanted to see. Conn wrote the reports, which one of the physicians would sign without change even if the applicant for benefits failed to appear for examination. Huffnagle's "medical suite" was in Conn's office.

After the scheme came to light, Conn and Daugherty pleaded guilty to several federal felonies. Bradley Adkins, one of the physicians, was convicted by a jury. Huffnagle died before he could be prosecuted. The total cost to the United States of benefits granted by Daugherty exceeds $500 million, and Conn reaped more than $5 million in legal fees. Many details of this scam are recounted in U.S. Senate Committee on Homeland Security and Governmental Affairs, Staff Report, How Some Legal, Medical, and Judicial Professionals Abused Social Security Disability Programs for the Country's Most Vulnerable: A Case Study of the Conn Law Firm (Oct. 7, 2013).

The agency's Inspector General formally notified it in 2015 of "reason to believe that fraud was involved in th[e] applications for Social Security benefits" of 1,787 named persons from January 2007 through May 2011. That notice, given under 42 U.S.C. 1320a8(l), set in motion a process for redetermination of the benefits awarded to those persons. Two statutes, one covering disability payments and the other covering supplemental-security income, say that redetermination is mandatory if there is reason to believe that fraud played a role, and they add that in conducting this redetermination the agency "shall disregard any evidence if there is reason to believe that fraud or similar fault was involved in the providing of such evidence." We put the full text of these statutes in an...