United States District Court, D. South Carolina
OPINION AND ORDER
C. Coggins, Jr. United States District Judge.
the First World War, "a primarily agrarian American
society had become a primarily urban, industrialized
one." Commissioner Martha A. McSteen, Fifty Years of
Social Security, Social Security Bulletin 36
(1985). This led to a greatly increased reliance
on cash wages, which became problematic as the Great
Depression ravaged the nation during the early 1930s.
Catastrophic economic losses occurred throughout the country,
and, "[b]y the mid-1930's, the lifetime savings of
millions of people had been wiped out." Id. at
37. Faced with an aging population on the brink of
"living their remaining years in destitution,"
Congress acted by passing the Social Security Act of 1935
("the Act"). Id. President Franklin D.
Roosevelt, in signing the Act into law on August 14, 1935,
stated: "This law, too, represents a cornerstone in a
structure which is being built but is by no means
complete." Id. at 38.
the industrial revolution was quite literally fueled by coal
mined from Kentucky and West Virginia's mountains. With
dangerous work comes increased physical injury. Much of
Appalachia has spent the greater part of the twentieth
century enduring hard, physically exhausting, and dangerous
labor to provide energy for the United States. American
growth and prosperity was borne on the backs of these blue
collar workers. As disability rates increased across the
country, in 1956, Congress expanded the Social Security
system to include payments to disabled workers. Now, every
year, millions of Americans receive Supplemental Security
Income ("SSI") and Disability Insurance Benefits
("DIB"). These benefits are often the only means by
which disabled individuals can provide food and shelter for
their families. Given the importance of these benefits,
Congress and the Social Security Administration
("SSA") have established a complex administrative
system to determine (and redetermine) whether individuals are
properly receiving benefits. See, e.g., 42 U.S.C.
§ 405. This administrative system is overseen by the
SSA, but it is moored by the procedural due process
requirements of the United States Constitution.
this case comes to the Court by way of a request for judicial
review, it is not the typical administrative appeal that this
Court sees on a daily basis; instead, this case presents
important questions of due process and administrative
procedure related to the SSA's redetermination process.
Specifically, this case involves a massive fraud scheme
perpetrated by attorney Eric Conn, two corrupt ALJs, and
several doctors. After the SSA uncovered and pursued this
scheme, it discontinued the benefits of thousands of attorney
Conn's clients and required them to have their benefits
redetermined. Plaintiff was one of those clients, and the SSA
discontinued his benefits, finding that his benefits were
based on a fraudulent medical report. Yet, despite the
critical importance of whether this report was accurate or
inaccurate, the SSA prohibited Plaintiff from challenging its
determination that the report was fraudulent. Plaintiff
contends that due process requires more, and this Court
agrees. Prior to addressing Plaintiff's claims, the Court
turns to the lengthy history underlying this case.
Attorney Eric Conn's Scheme to Defraud the SSA
Kentucky, attorney Eric Conn was known as "Mr. Social
Security." Senate Committee on Homeland Security and
Governmental Affairs, 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 1 (Oct. 7, 2013) (hereinafter,
"Senate Report"). "At the height of his
success in 2010, Mr. Conn employed nearly 40 people and
obtained more than $3.9 million in legal fees from [the] SSA,
making him the agency's third highest paid disability
lawyer that year." Id. Today, Mr. Conn is
disbarred and resides in the Federal Correctional Institution
- Hazelton, serving a 27-year prison sentence as a result of
a complex scheme to defraud the SSA.
scheme, according to the SSA, worked like this: Conn created
a limited number of template Residual Capacity
("RFC") forms, which he or attorneys in his office
filled out ahead of time." Hicks v. Comm'r of
Soc. Sec., 909 F.3d 786, 793 (6th Cir. 2018) (citation
omitted). "These forms, which are normally meant to
convey a claimant's ability to do work-related activities
on a day-to-day basis in a regular work setting, were
purportedly manipulated to ensure that they satisfied the
SSA's criteria for establishing a disability."
Id. (internal citations and quotations omitted).
Four doctors-Bradley Adkins, Ph.D.; Srinivas Ammisetty, M.D.;
Frederic Huffnagle, M.D.; or David P. Herr, D.O-"then
signed these forms without making any adjustments, and Conn
submitted the forms to the SSA on behalf of his
clients." Id. (citation omitted). Former ALJ
David Daugherty, "who was allegedly receiving bribes
from Conn, then assigned Conn's cases to himself and
issued favorable rulings to Conn's clients."
Id. (citation omitted). Former ALJ Daugherty
"scheduled as many as 20 hearings form Mr. Conn's
clients in a single day, moving them through in 15 minute
increments." Senate Report at 2. "Eventually, Judge
Daugherty stopped holding hearings for Mr. Conn's cases
altogether, instead deciding them 'on the record' in
large numbers-and always favorably." Id.
the gravity of the alleged scheme, one would expect that the
SSA would act as soon as it learned about the fraud. To the
contrary, it took the SSA nearly a decade to begin to close
the book on the Conn scheme. "The SSA first learned
about possible wrongdoing involving Daugherty and Conn as far
back as 2006, when a senior case technician and a master
docket clerk in the SSA's Office of Disability
Adjudication and Review (which houses the ALJs) raised
concerns that Daugherty was reassigning Conn's cases to
himself and rapidly deciding them in the claimants'
favor." Hicks, 909 F.3d at 793 (citation
omitted). In response to these complaints, supervisors
retaliated against the employees, ultimately leading to the
resignation of Jennifer Griffith in October 2007. ECF No. 7-1
at 12. "At the time of her resignation, [Griffith] cited
the reason for her leaving as the 'misconduct of ALJ
David Daugherty' by which she was referring to 'his
misappropriation of the cases and deciding those favorably
based on the attorneys assigned them.'" Id.
(quoting Tr. of Evidentiary Hearing 28, Griffith v.
Conn, No. 11-cv- 157 (E.D. Ky. Sept. 8, 2014)). In July
2009, Ms. Griffith called SSA's Office of Inspector
General ("OIG") to report the misconduct.
the Wall Street Journal published an article in May 2011,
"highlight[ing] Daugherty's practice of taking
Conn's cases and awarding benefits and not[ing] that
'[a] possible connection between Messrs. Daugherty and
Conn is a subject of the inspector general's
investigation.'" Hicks, 909 F.3d at 793
(quoting Damian Paletta, Disability-Claim Judge Has
Trouble Saying "No," Wall St. J. (May 19,
2011)). "Also in 2011, the U.S. Senate Committee on
Homeland Security and Governmental Affairs launched an
investigation into Daugherty's unusually quick
adjudication of disability claims and unusually high rate of
granting benefits." Id. "The Committee
issued a report in October 2013 finding that 'Judge
Daugherty worked with Mr. Conn in inappropriate ways to
approve a high volume of cases submitted by the Conn Law
Firm.'" Id. (quoting Senate Report at 5).
publication of the Wall Street Journal article in
May 2011, [the] SSA instituted a number of reforms to correct
the situation in Huntington, including reinstituting the
assignment of cases to all ALJ's (sic) on a strict
rotational basis." Senate Report at 2. "Mr. Conn,
Judge Daugherty, and Chief Judge Andrus also took steps
in reaction to the article." Id.
"According to the testimony of former employees, and
corroborated by documentary evidence, Mr. Conn's office
purchased several disposable prepaid cellular phones for the
purpose of allowing Mr. Conn and Judge Daugherty to
talk." Id. at 2-3. Mr. Conn then
"systematically destroyed several dozen of the Conn Law
Office's computers, and hired a local shredding company
to clear out a large warehouse full of documents."
Id. at 3. Conn's misconduct did not stop there,
however, as he devised a plan with Chief Judge Andrus to
discredit senior case technician Sarah Carver, one of the
initial whistleblowers from 2006. Id.
"According to former Conn and SSA employees as well as a
recorded SSA [OIG] interview in which Judge Andrus admitted
his part, he and Mr. Conn worked together to have video
surveillance conducted of Ms. Carver on days when she worked
from home in an attempt to catch her violating the
office's telework policies." Id.
the overwhelming evidence of corruption in the Huntington SSA
office, the SSA did not place former ALJ Daugherty on
administrative leave until 2011 and allowed former Chief ALJ
Andrus to remain in the office until September 2013, when the
SSA finally placed former Chief ALJ Andrus on administrative
leave pending a removal action. Id. At the time the
Senate Report was issued in October 2013, Mr. Conn was still
representing claimants seeking disability benefits and had
"even opened a new office in California."
2014, the SSA's OIG "had identified 1, 787
individuals-all of whom had been represented by Conn-whose
applications, the OIG 'had reason to believe,' were
tainted by fraud." Hicks, 909 F.3d at 794.
"This tag has statutory significance." Id.
Under the Act, "the SSA is required to 'immediately
redetermine' a beneficiary's entitlement to
disability benefits if, at any point after granting benefits,
the SSA has 'reason to believe that fraud or similar
fault was involved in the application' for
benefits." Id. (quoting 42 U.S.C. §
405(u)(1)(A)). Under the Act, "[t]he SSA may, however,
delay redetermination proceedings if 'a [state or federal
prosecutor] with jurisdiction over potential or actual
related criminal cases, certifies, in writing, that there is
a substantial risk that such action by the Commissioner of
Social Security with regard to beneficiaries in a particular
investigation would jeopardize the criminal prosecution of a
person involved in a suspected fraud.'" Id.
"Notwithstanding the SSA's clear statutory
mandate to 'immediately redetermine' benefits
upon suspicion of fraud, the OIG provided the 1, 787 names to
the SSA with the understanding that SSA was not to take
any adverse action against any individual on the
list until further notice." Id. (internal
citations and quotations omitted) (emphasis added).
not until May 12, 2015, that OIG finally informed the SSA
that it could proceed with redetermination hearings.
Id. Upon receiving the green light to proceed, the
SSA notified more than 1, 500 individuals (including
Plaintiff) that it was instituting redetermination
proceedings. Id. Critically, however, the SSA
informed the individuals that it would be disregarding any
evidence from the four medical providers listed above if that
evidence was presented by Mr. Conn in a prior hearing before
former ALJ Daugherty. Not only were the RFC determinations
excluded, all evidence, including quantitative
testing and behavioral observations, was excluded in the
redetermination proceedings. Id. Thus, nine years
after the SSA first learned about the fraud, and in apparent
disregard of the Act's immediacy requirement, the SSA
began redetermining whether Mr. Conn's clients were
entitled to disability benefits.
repercussions of these delayed redetermination proceedings
were immediate and severe. Approximately 800 former Conn
clients lost their benefits. UPDATE 800 Former Conn
Clients "Likely to Get Benefits Back,
" WSAZ (April 30, 2019),
-FBI-374559171.html. These individuals have struggled to feed
their families and obtain adequate medical treatment.
Id. Tragically, at least four former Conn clients
have committed suicide. Id. Remarkably, however,
almost 200 lawyers and law students volunteered their
services to help Conn's former clients challenge their
denials in federal court. Id. The Court commends
these attorneys for their pro bono service and outstanding
advocacy. Indeed, in this case alone counsel travelled from
Kentucky twice at their own expense to represent Plaintiff in
hearings before this Court. It is this type of advocacy and
commitment to public service that brings great credit to the
the cases filed by these pro bono attorneys were largely
unsuccessful, as district court judges rejected due process
challenges to the redetermination process. However, a series
of cases was assigned to (then) United States District Judge
Amul Thapar of the Eastern District of
Kentucky. Judge Thapar found that the SSA denied Amy
Jo Hicks, a former Conn client, the right to a meaningful
hearing in violation of the Due Process Clause. See Hicks
v. Colvin, 214 F.Supp.3d 627 (E.D. Ky. 2016),
aff'd by 909 F.3d 786 (6th Cir. 2018).
Specifically, Judge Thapar found that the SSA's
prohibition on claimants' challenging the exclusion of
evidence submitted by Conn from the four doctors named above
was a violation of the claimants' procedural due process
rights. Id. After issuing his decision in
Hicks, Judge Thapar issued a similar decision in
each of the other six cases assigned to him. Hicks,
909 F.3d at 796. At the same time, several other district
judges rejected the very same challenges by other claimants.
Inevitably, the case went to the United States Court of
Appeals for the Sixth Circuit, which ultimately affirmed
Judge Thapar's opinion in a split decision, finding that
the SSA's refusal to allow claimants the fair opportunity
to rebut assertions that medical reports were fraudulent
violated the minimal protections of procedural due process
and the formal-adjudication requirements of the
Administrative Procedure Act ("APA"). See
Id. at 813 ("The Due Process Clause of the
Constitution and the Administrative Procedure Act required
the SSA to allow plaintiffs an opportunity to show why the
medical reports uniformly and entirely disregarded in their
redetermination proceedings were not, in fact, tainted by
fraud."). The SSA filed a Petition for Rehearing En
Banc, which was denied by the full Sixth Circuit. ECF No.
73-1. Senior Judge John M. Rogers, who dissented from the
panel majority, was the only judge indicating that he would
grant rehearing en banc. Id. On June 19,
2019, Justice Sonia Sotomayor granted Defendant's
application to extend the time to file a petition for a writ
of certiorari. See Saul v. Hicks, No. 18A1319 (June
undeniable that Mr. Conn's illegal behavior has
devastated the lives of thousands of people and led to
extensive civil and criminal litigation. Indeed, Mr. Conn and
former ALJ Daugherty have both been sentenced to federal
prison. Mr. Conn pled guilty and was initially sentenced to
12 years' incarceration, but that sentence was extended
to 27 years' incarceration after Mr. Conn fled the
country pending sentencing and was located in Honduras after
six months on the run. Former ALJ Daugherty was sentenced to
4 years' incarceration. Alfred Bradley Adkins, Ph.D., was
convicted of conspiracy, mail fraud, wire fraud, and making
false statements, and was sentenced to 25 years'
incarceration. Chief Judge Andrus pled guilty and was
sentenced to 6 months' incarceration.
this lengthy factual and procedural history in mind, the
Court turns to the facts of this case.
Plaintiff's Initial Award of Benefits and Redetermination
parties set forth, in detail, Plaintiff's medical history
in their briefing. By way of summary, Plaintiff has
experienced serious health issues for over twenty years.
Plaintiff has been treated multiple times for fibromyalgia,
joint pain, muscle weakness, Bell's Palsy, anxiety,
depression, suicidal ideations (and at least one suicide
attempt), Arnold Chiari malformation, and hypertension.
filed applications for DIB and SSI benefits on November 18,
2008, claiming a disability onset date of December 1, 2006.
After an initial denial, Plaintiff, represented by Mr. Conn,
requested a hearing on his claims before an
Former ALJ Daugherty issued a fully favorable decision dated
November 2, 2009. ECF No. 43-4 at 11-15. Former ALJ Daugherty
found that Plaintiff suffered from the following severe
impairments: Arnold-Chiari Syndrome, Bell's Palsy,
Sciatica, and Low Back Pain, and had the "residual
functional capacity to lift 8-10 pounds occasionally and 5
pounds frequently, stand/walk 2-3 hours per work day, sit 3
hours per work day, only occasionally crawl and never
climb." Id. at 13. Former ALJ Daugherty found
"that the information provided by Dr. Huffnagle most
accurately reflects [Plaintiff's] impairments and
limitations, " gave little weight to the State agency
medical consultants' physical assessments, and limited
Plaintiff to "sedentary work at best." Id.
at 13-14. ...