Member of Congress asks for federal investigation into well-known E. Ky. attorney

bestep@herald-leader.comJune 12, 2014 

In 2002, lawyer Eric C. Conn touted his services on a billboard on the Mountain Parkway just outside of Salyersville.

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A member of Congress has asked the federal prosecutor for Eastern Kentucky to look into allegations that a well-known lawyer committed disability fraud.

U.S. Rep. Jackie Speier, a Democrat from California, said investigations have turned up evidence of fraud involving Eric C. Conn, a Floyd County lawyer who has made millions handling federal disability cases, and David B. Daugherty, a former administrative law judge who approved claims for more than 3,000 people Conn represented.

"Justice in this case appears to be long delayed," Speier said in her letter to U.S. Attorney Kerry B. Harvey.

There have been no criminal charges or administrative sanctions against Conn, Daugherty or doctors, Speier said.

Conn continues to represent people in disability claims and collect fees from the federal government, Speier said.

Speier asked Harvey to "conduct an independent evaluation" of the evidence and of claims that Conn and Daugherty took part in fraud, and determine whether they broke any laws.

Harvey's office did not respond to a request for comment.

An attorney representing Conn said Speier's request was improper.

"I think it's really a tragedy that a politician would try to influence a federal prosecutor's decision," said J. Kent Wicker, a former federal prosecutor. "Politicians need to stay out of criminal investigations."

Wicker said Conn flatly denies that he has engaged in any wrongdoing. In a court document, Daugherty also has denied allegations of wrongdoing.

Conn, 53, has made a lucrative specialty of representing people seeking federal disability benefits, calling himself "Mr. Social Security" in advertisements. His office complex at Stanville features a large replica of the Lincoln Memorial.

He has been in the spotlight over concerns about fraud sapping the disability trust fund.

A U.S. Senate committee investigation released last year alleged that Conn used bogus medical reports to justify claims that clients could not work, and colluded with Daugherty to get benefits approved.

Daugherty, who heard appeals of claims that had been denied, assigned Conn's cases to himself and approved them without question, without holding hearings in many cases, the Senate investigation said.

From 2005 to 2011, Daugherty approved disability appeals handled by Conn in 3,143 cases, never denying one even though the national approval rate was about 60 percent, according to the investigation.

Investigators said Daugherty refused to explain nearly $70,000 in cash deposits into his bank account during that time.

For his part, Conn received $22.7 million in attorney fees from the Social Security Administration between 2001 and 2013, the report said.

Conn refused to testify before a Senate committee considering the report last October, and Daugherty did not show up.

Three medical professionals who allegedly rubber-stamped reports for Conn attended the committee hearing. David Herr, an Ohio physician, refused to testify, and Pikeville psychologist Bradley Adkins and Srinivas Ammisetty, a Floyd County doctor, said they had not intentionally done anything wrong.

Allegations about Conn and Daugherty surfaced again this week at a hearing before the House Oversight and Government Reform Committee, which used Daugherty as an example of administrative judges costing taxpayers billions by improperly approving disability claims.

Daugherty awarded half a billion dollars in benefits to Conn's clients between 2005 and mid-2011, when Daugherty resigned, the committee report said.

Speier, a member of the committee, sent Harvey the letter on the eve of the hearing.

It wasn't the first request for a federal investigation of Conn and Daugherty.

Lexington attorney Mark Wohlander, a former federal prosecutor, said he talked with the FBI more than a year ago about Conn and Daugherty.

Wohlander represents two women who said they witnessed and reported improper conduct by Daugherty — such as assigning Conn's cases to himself — when they worked for the Social Security Administration.

The two, Jennifer Griffith and Sarah Carver, are seeking payment under a federal law that allows whistleblowers to get a portion of the money recovered through claims that the government has been defrauded.

Wohlander said it is baffling that the case has not resulted in criminal charges or other sanctions, which has caused speculation in Eastern Kentucky: "Who does (Conn) know?"

"Somebody's sitting on this case," Wohlander said. "Nobody can figure out why no one has done anything."

The answer might be that no one has committed a crime, Wicker said.

Wicker said that Daugherty approved nearly all the disability claims before him — not just those Conn handled.

Wicker also said that the U.S. Department of Justice declined to intervene in the whistleblower lawsuit against Conn, Daugherty and others.

Speier said in her letter that she understood that the Social Security Administration held off on taking administrative action against Conn and Daugherty during a criminal investigation by the federal prosecutor for southern West Virginia, but that that inquiry "has yielded no appreciable action."

Daugherty worked out of the Social Security office in Huntington, so any charges in the case could be handled in West Virginia.

But Speier said the investigation belongs in Eastern Kentucky.

More than 90 percent of the cases of potential fraud involve Kentucky residents, Speier said.

Conn lives and works in Eastern Kentucky, and when Daugherty heard cases in which Conn represented people, he did so at a Social Security district office in Prestonsburg, Speier said.

Bill Estep: (606) 678-4655. Twitter: @billestep1.

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