Reforming the Social Security Appeals Process

Policy Reports | National Security

No. 389
Thursday, February 02, 2017
by Pamela Villarreal and Laura Wiltshire

Executive Summary

In 2015, about 12 million workers and their dependents received Social Security Disability Insurance (SSDI) benefits. While this is slightly fewer than the 12.1 million beneficiaries in 2014, beneficiary growth has averaged about 4 percent a year since 1990.

Most claims are processed within three to five months. If the initial claim is denied, an applicant can appeal the decision. Once an appeal is filed, a reconsideration decision is made within about four months. Reconsideration involves review by another disability examiner and medical adviser team.

Some 900,000 claims were still awaiting final decisions in 2015:

  • About 441,000 applications filed in 2014 were awaiting final decisions.
  • Another 405,000 applications filed as far back as 2012 were still awaiting final disposition.
  • A smaller number of claims filed earlier, from 2008 to 2011, had still not been finalized in 2015.

If a claim is denied on reconsideration, the claimant can request a hearing before an administrative law judge (ALJ). The ALJ has the option of granting or denying a hearing based on the evidence in the record. The average wait time for a hearing varies by location of the hearing office. For example, as of September 2016:

  • In Fort Smith, Arkansas, the average wait for a hearing was 8 months.
  • In Houston, Texas, the average wait was one year.
  • In Buffalo, New York, Columbia, South Carolina, and Ponce, Puerto Rico, the average wait was over two years!

Factors Influencing Award Rates. Since 2000, award rates at all adjudicative levels for all claimants have trended downward, but the number of beneficiaries has grown, most likely as a result of the aging population. The majority of beneficiaries each year are 50 to 59 years of age; once awarded benefits, few claimants ever return to work.

In addition, since the early 1980s, new, relaxed criteria for determining disability status have opened the door to conditions that rarely constituted a disability in the past. These “nonexertionary” conditions are not
associated with a diagnosable disease or injury. The two most common are mental disorders (nonintellectual disabilities, such as mood disorders) and some musculoskeletal conditions.

Appealing to an Administrative Law Judge. The success rate for claimants at the ALJ level depends on the state in which their appeal takes place. Approval rates also vary by individual judge within a state. For instance:

  • Hawaii has only one office; of its six judges, all but one have approved benefits in over 50 percent of the cases presented to them.
  • Maine has only one office, and its seven judges are split; three have approval rates below 50 percent and four have rates above 50 percent.
  • In Kansas’ two offices, neither Topeka nor Wichita has a judge with an approval rate over 50 percent.

Solutions. Since the caseloads of administrative law judges vary significantly across the country, using a system of random assignment of cases to judges (regardless of the origin state of the claim) could ease the backlog and mitigate variations based on the economic characteristics of each state. This would involve allowing claimants to present their cases remotely via videoconferencing. The Social Security Administration already does this when the claimant lives in a remote area and is physically unable to appear at a hearing.

A common complaint about an ALJ-level hearing is that the claimant is allowed to submit new evidence. The purpose of an appellate hearing should be to review existing evidence to correct errors or clarify interpretation of the law. New evidence should be reviewed at the reconsideration level only, or presented in a separate claim and evaluated at the initial determination level. 

SSDI is the fastest growing component of the Social Security system, in terms of both cost and beneficiary growth. The Social Security Administration contributes to the cost growth by granting government’s highest paid employees (administrative law judges) the discretion to approve hundreds of thousands of dollars in denied claims per year. While an overhaul of the Social Security disability system is needed, interim changes to the appeals process would likely result in cost reductions and a quicker appeals process.

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