Politics & Government

Government moves to suspend disability payments to many in Eastern Kentucky, citing suspected fraud

A billboard for lawyer Eric Conn on the Mountain Parkway in 2002.
A billboard for lawyer Eric Conn on the Mountain Parkway in 2002. Herald-Leader

The federal government has moved to suspend disability payments to some people in Eastern Kentucky whose cases were handled by Floyd County attorney Eric C. Conn, citing suspected fraud by Conn and doctors whom his clients often consulted.

Attorneys familiar with the issue said it was possible that several hundred people received suspension notices from the Social Security Administration.

Losing benefits will cause serious financial hardship for families, said Lexington attorney Mark Wohlander, who has been consulted about the suspension letters.

"Who's going to put food on the table for these people?" he said Tuesday.

The loss of benefits also will hurt the area because federal disability payments make up a considerable piece of the economy in some counties.

A Senate investigation released in October 2013 found a raft of improper practices by Conn in representing people who were trying to win disability benefits.

Conn wrote medical reports and paid doctors to sign them — rather than perform real examinations of whether someone was disabled — and colluded with a Social Security judge who rubber-stamped benefits for Conn's clients with little or no scrutiny, according to the Senate investigation.

Conn received $22.7 million from 2001 to 2013 from Social Security to represent claimants, making him one of the best-paid lawyers in the field nationwide, the Senate report said.

The judge who allegedly colluded with Conn was David B. Daugherty. Senate investigators said they found $69,800 in cash deposits by Daugherty from 2003 to 2011 that he wouldn't discuss and which couldn't be explained easily based on his salary and assets.

Conn's attorney, J. Kent Wicker, said Tuesday that a multiyear investigation of Conn's practice had concluded "without any finding of fraud or other misconduct."

Wicker said the Social Security Administration has directed that some cases should be returned to an administrative law judge for review, which he called an "unfortunate and unnecessary move."

"Eric Conn has been representing thousands of clients for over 20 years with skill and integrity," Wicker said.

Daugherty failed to appear before the Senate committee but has denied wrongdoing in a federal lawsuit alleging he had an improper relationship with Conn.

The Senate report also named four doctors it said provided questionable medical evidence to Conn to justify clients' disability claims.

The same doctors were cited in the suspension letters, according to attorneys familiar with them.

The Social Security Administration, or SSA, did not respond to requests from the Herald-Leader for information about the suspension letters Friday or Tuesday. However, the newspaper obtained a copy of one of the letters with the name and claim number of the recipient redacted.

The letter, dated May 18, said "we are suspending your disability benefits and the benefits of anyone entitled under your Social Security record."

The letter said the Office of Inspector General had notified SSA that there was reason to believe fraud was involved in certain cases that used evidence Conn submitted on behalf of clients from four doctors: Frederic Huffnagle, who died in 2010; David Herr; Bradley Adkins; and Srinivas Ammisetty.

At the Senate hearing, Herr asserted his right to not give testimony that might incriminate him. Adkins and Ammisetty denied intentionally doing anything wrong.

The letter that went out last week said that under the law, SSA must make a new determination of whether someone is eligible for benefits when there is reason to believe there was fraud in the earlier application. In doing the review, the agency must disregard information from the four doctors, the letter said.

The letter said the agency would not be able to consider evidence produced by Huffnagle from January 2007 to May 2011; from Adkins from July 2007 to May 2011; from Ammisetty any time after July 2007; and from Herr from December 2009 to April 2011.

The letter the newspaper obtained told the recipient that the judge in his 2010 case cited information from Huffnagle in judging the beneficiary to be disabled. Without that finding, other evidence in the case did not support the finding of disability, the letter said.

The letter said the beneficiary could submit additional information within 10 days.

That will be a problem for many people because Conn had control of their files and shredded many, Wohlander said.

The Senate report said that after SSA investigators contacted Conn, he hired a shredding company to clear out a large warehouse of documents, destroying 2.6 million pieces of paper.

The letter the newspaper obtained said if the person could not submit more evidence within 10 days, he or she could submit it later to the judge reviewing the case.

Many people formerly represented by Conn will have trouble finding another attorney to represent them in the process of redetermining their eligibility, said Ray S. Jones, a Pikeville attorney and state senator who was contacted by three people who got letters.

"There's going to be a lot of innocent people hurt by this," Jones said.

Attorneys familiar with the issue said some people who will have to go through the review process probably would not have qualified for benefits if not for the questionable evidence Conn submitted but that many would have.

Prestonsburg attorney Ned Pillersdorf said his information is that more than 800 suspension letters went out last week.

He had been contacted by a number of people who received letters, and had talked with other attorneys who had been contacted as well.

Pillersdorf said it was heavy-handed for SSA to suspend people's disability payments while redetermining their eligibility.

"To suspend these vulnerable people is unconscionable," he said. "This is almost an ambush by the Social Security Administration."

Pillersdorf said he was helping set up an emergency meeting of local attorneys Wednesday afternoon to try to figure out how to head off suspensions of the disability checks.

One approach would be to file a lawsuit in federal court seeking to block the suspensions.

Wohlander said that with the letter suspending benefits during a redetermination process, SSA is essentially putting people back at the status they had before a judge awarded them benefits.

He also accused the SSA of failing to stop the alleged misconduct when the agency first learned about the problem.

Wohlander represents two whistle blowers suing Conn and others over alleged fraudulent conduct. One of them reported problems to superiors beginning in 2007, but SSA did nothing to stop the problems, allowing fraud to continue for years, Wohlander said.

"This did not have to happen," he said.

The Social Security Administration told the Herald-Leader in a statement at the time of the Senate hearing that the agency shared concerns raised in the report and had taken steps "to address any established wrongdoing."

Conn has not been charged with a crime in the case.

U.S. Attorney Kerry Harvey, who heads the office responsible for Eastern Kentucky, told the Herald-Leader he could neither confirm nor deny if there was an investigation of Conn.

However, the U.S. Department of Justice had recused his office from any involvement in prosecuting Conn if there is a case to avoid any appearance of impropriety or potential conflict of interest, Harvey said. The office represents SSA in cases in which Conn would have been on the other side.

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