Why Administraive Law Judges Decide the Way They Do

On Tuesday, May 30, the Wall Street Journal published an editorial that criticized administrative law judges of the Social Security Administration for finding claimants disabled in 70% of cases in which the claimant appealed the initial, and most often also a reconsidered, determination that he or she is not disabled.  On the very next day, the Journal published an editorial criticizing the whole idea of having administrative law judges, the agencies most affected by their decisions are the same agencies that the judges are dependent on for their jobs and paychecks.  As the Journal points out, the administrative law judges are chosen by unelected bureaucrats and therefore have at least subtle pressure to make decisions favorable to the bureaucracy.   A vast majority of administrative law judges are employed by the Social Security Administration, which has more administrative law judges than the entire federal court system has judges.  At first glance, that would seem to mean that a majority of administrative law judges actually mostly make decisions that are adverse to the agency that employs them.

Although the fact that the administrative law judges of the Social Security Administration find such a high percentage of claimants to be disabled appears to contradict the notion that administrative law judges do not bite the hand that feeds them, it is not a contradiction at all, and can be explained by distinguishing between program costs and administrative costs.  Regarding disability benefits, program costs are the amount of the disability payments made.  Administrative costs are what it costs the agency to administer the program.  In theory, the distinction should make no difference to administrative law judges of the Social Security Administration.  An administrative law judge is nearly impossible to fire and gets the same pay regardless of what percentage of claimants he or she finds to be disabled and regardless of how many or few decisions he or she makes.  In practice, it makes a lot of difference.

When an administrative law judge is first employed by the Social Security Administration, the judge has almost no control over the hearing office to which he or she is assigned.  From their point of view, location is a very important part of working conditions.  Some locations are more desirable than others.  Before I retired from the Social Security Administration, I worked as an attorney in a few of its hearing offices.  Once, when one of my colleagues had applied to become an administrative law judge, I jokingly asked him that when he became an administrative law judge to send me a picture postcard from Fargo, North Dakota.  As I knew he would, he did become an administrative law judge, but he did not go to Fargo.  He went to Paducah, Kentucky.  I don’t mean to insult either city, but both rank low on the list of cities that prospective administrative law judges would consider to be prime locations.  The way for an administrative law judge to get assigned to a preferred location is to please the management of the Social Security Administration, and the way to please management of the Social Security Administration is to generate as many decisions per month as possible and to keep the average age of cases pending to a minimum.  In other words, their employment with the Social Security Administration tends to be more pleasant when they keep administrative costs under control.  When they do that, they get to work at the locations that they prefer and to get praised.  If they generate few decisions and let the cases that were assigned to them get old, they get social pressure.  Every month, a report is generated and circulated among the hearing offices of the Social Security Administration that ranks judges by number of decisions issued and average age of cases pending.  Ranking high on the list is a more pleasant experience than ranking low.

Being productive and keeping the average time down that claimants must wait for decisions is a good thing, but the most obvious and tempting way to issue many decisions and to keep them from getting too old is to find disability claimants to be disabled, whether they are truly disabled or not.  Issuing a favorable decision is relatively easy and tends to make everyone directly involved with the case happy.  Often, a favorable decision can be made without even conducting a hearing.  Issuing a decision that is unfavorable or partially favorable (that although the claimant is disabled, he or she was not disabled for the entire period alleged) tends to be much more time consuming and to involve considerably more administrative expense.  A hearing must be scheduled.  Often a medical expert and/or a vocational expert (each of which is a contractor who gets paid by the number of hearings attended) must be hired as a witness.  An unfavorable or partially favorable decision is much longer and more complex than a favorable decision because it must go into greater detail explaining the law and analyzing the evidence.  The decision may be appealed and the appeals decision may remand the case back to an administrative law judge to start the process again.  No court ever criticizes the Social Security Administration for erroneously finding a claimant disabled.  The courts don’t even see those cases.  If a court criticizes the decision of an administrative law judge, it is either for not finding a claimant disabled whom the court perceives as being disabled or for not having enough evidence to support the decision.

Many claimants who have been waiting a long time for a hearing or a decision, contact their members of Congress for help in expediting their case.  Typically, the thing the member of Congress wants is for the case to be processed as soon as possible, preferably in a way that make the constituent happy.  Since Congress determines how much money to appropriate to the Social Security Administration each year, the agency is very motivated to keep members of Congress happy, which usually involves trying to satisfy the wants and needs of the claimants who ask the members of Congress for help.  When Congress does appropriate money to the Social Security Administration each year, the money it appropriates is all for administrative expenses, and the Social Security Administration cannot spend more money than was appropriated.  However, the Social Security Administration has no effective incentive to keep program costs under control.  Since there is considerable pressure to keep cases reduce the backlog and keep processing time down and very little pressure to avoid finding persons disabled who are not really disabled, the fact that administrative law judges of the Social Security Administration issue decisions favorable to the claimant 70% of the time, on average, should not be surprising.

I am well aware that, even with all the incentive to find people disabled, the Social Security Administration denies benefits to many people who are genuinely disabled and makes many of those whom it eventually finds entitled to benefits wait an obscene amount of time for a final decision, but until something is done to limit the program costs, the combination of disability benefits and other entitlements and the rising costs of interest on the national debt threaten to consume the entire federal budget long before the end of the century.