The Fraud Examiner
In the News: Disability Fraud — Alive and Well
By Michael Hoffmann
Disability fraud costs companies billions of dollars per year and, as seen recently in U.S. headlines, can be as far reaching as the judiciary. The typical disability fraudster usually fakes an injury after an accident or exaggerates a real injury’s seriousness to sue the party that “injured” him or to collect disability checks due to his “inability” to work. However, disability fraud has evolved into a much more complex criminal endeavor. As of August 2013, more than 14 million Americans were receiving benefits through Social Security Disability Insurance (SSD), Supplemental Security Income (SSI), or both. Cases of manufactured whiplash after a fender-bender still exist, but many other avenues of disability fraud are now prevalent. Therefore, CFEs need to take heed of the new dimensions.
Judge and Lawyer: Two Crooks in a Pod
The most current newsworthy instance of disability fraud involves a Kentucky lawyer, Eric Conn, devising a scheme with a West Virginia judge, “the honorable” David Daugherty. Conn pocketed millions from Social Security disability programs in collusion with Judge Daugherty, who approved fraudulent disability claims at an assembly-line rate. A two-year investigation led by Senator Tom Coburn (R., Oklahoma), ranking member of the Senate Homeland Security and Governmental Affairs Committee, revealed a coordinated case of fraud responsible for the approval of billions of dollars in false claims.
From 2006 to 2010, Conn’s law firm reportedly made $4.5 million in attorney fees from the Social Security Administration (SSA), fooling the system with discredited doctors signing off on suspect medical conditions and working with Administrative Law Judge Daugherty to expedite the claims process.
Daugherty, assigned to review disability hearings in the Huntington, West Virginia, SSA office, prioritized Conn’s cases, approving claims at an extraordinarily high frequency and holding hearings as prompt as 15 minutes. Reportedly, Daugherty approved 3,143 of Conn’s disability cases and dismissed only 18, awarding disability benefits totaling $2.5 billion during the life of the scam.
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