of the reconsideration procedure itself. That possibility is that when an additional layer of decision making is introduced, those who make decisions at lower levels tend to assume a lesser sense of responsibility for their decisions. The reconsideration personnel, constantly pressed to speed up, can all too frequently "pass the buck" in the more difficult or time-consuming cases to the re-reconsideration level. I do not doubt that this exists to some degree even unconsciously. The same problem can, and probably does, exist at the next stage, the re-reconsideration level, with responsibility passed on to the ALJ. Even before initiation of the re-reconsideration procedure, there was all too much evidence of insufficient development of evidence to support a denial at the first two states, initial determination and reconsideration. It often seems that the operative prinIciple is that any injustice caused by inattention or sloppiness will be caught at the next level because the "truly eligible" wil appea and the next level will correct the error.

Of course, as should be obvious, "the buck" can only be "passed" to a higher level if the claimant is of the persistent and aggressive class. Obviously, passive individuals or those with a low threshhold for acceptance of apparent futility will simply drop out somewhere along the line, even though they may indeed be "truly eligible." The fact that a substantial number of individuals who successfully seek reconsideration or and ALJ hearing are determined to be eligible based upon evidence developed by SSA, not by the claimant, only after reconsideration or a hearing is requested demonstrates two things: (1) The "buck" has been passed, either consciously or unconsciously; and, (2) some individuals who did not seek a higher level of review were eligible but were improperly denied. What all of this reduces to is what should be obvious but is apparently often not recognized: the principal focus should be upon making correct decisions in the first place, that is, at the initial determination level. Professor Dixon has made the point quite persuasively-the more precise the standard of disability, in both the statute, the regulations, and more exemplary or precedental decisions, the more that evidence is fully developed at the initial determination state, the less likely that erroneous decisions will be made. To the extent that initial decision making is improved, the volume of appeals should diminish and those that remain can be decided with more dispatch.

b. Informing The Denied Claimant of The Basis of Denial

Presently, an adverse notice of initial determination and an adverse reconsideration decision merely paraphrase the statutory definition of disability, advising claimants that they do not meet the standard. It is, in short, wholly conclusionary. Neither the rejected claimant nor anyone who tries to assist, be they attorney, paralegal or a friend, can tell why the claimant was denied. So, a decision to appeal to higher authority is not at all an informed decision; it is merely a stab in the dark. This failure to explain why is the height of mismanagement and injustice. Two consequences would flow from a denial notice that actually explained why that claimant was denied. First, it is likely that in many instances the decision would be more acceptable; that is, that no further appeal would be taken. Now, further appeal is often made, particularly by unrepresented claimants, merely in hope that someone at a higher level will explain the denial to them. Secondly, a precise statement of the basis of denial will permit the claimant to focus down on the precise basis for denial at the next level in the process. Now, at each stage the claimant and any representative must use the shotgun approach and prove all elements of eligibility.

Mr. Sisk's bill, H.R. 8018, would amend § 205 (b) to provide for such a notice of an adverse consideration. I am in full agreement with that suggestion but would urge upon the Committee my belief that the arguments in favor of such a provision are even stronger in the case of the initial determination notice; the requirement should be imposed at both levels. The same consequences of adequate notice should be operative at the initial detemrination level. That is, greater acceptability of the initial determination should reduce the requests for reconsideration. For those cases where reconsideration is requested, the sharper definition of the issues will mean that both the claimant and the reconsideration decision maker will concentrate their evidence gathering and review upon the principal issues.

On this same general issue, I would strongly oppose Mr. Sisk's proposed § 205 (b) (6) which would require a claimant to make specific written allegations of error in his appeal to the next higher level in the appeals process. Failure to comply with this requirement of filing an "answer" to SSA's "complaint" would

preclude the claimant's raising the unspecified issue later. A very similar requiremeat was found unconstitutional in Goldberg v. Kelly. More importantly, it is very unsound policy. Sixty-five percent of all claimants are unrepresented and only approximately half of the represented 35% are represented by attorneys. To impose what is nothing less than a pleading requirement on more than 80% of those who cannot really satisfy that requirement is of dubious merit.

c. Federalization of the Initial Determination Mechanism

I cannot shake the intuitive conclusion that the present system of initial determinations by the 50+ state agencies is one of the substantial causes of the "appeals crisis." All of the arguments in favor of the status quo, summarized by the staff in its monumental July, 1974 Report, all seem to be predicated upon inertia and political considerations. All of the arguments in favor of federalization seem to point to the benefit of claimants. I think it undeniable that there would be greater uniformity and faster processing times in a federalized system. Such consequences cannot help but reduce appeals. Congress has waited for 16 years for the HEW report on this issue urged upon the agency in 1959 GAO study. Congress should immediately appropriate funds for an objective analysis of this issue by a private contractor.

4. Conclusion

Withdrawing the protections of the APA from Social Security and SSI beneficiaries is not the answer because it is not those protections that are causing the problem. Something else is causing the volume of appeals. Diminishing the quality of justice available to one-sixth of the nation, and a most vulnerable one-sixth at that, will not diminish the quantity of justice demanded.

Mr. BURKE. Thank you very much.

We welcome Mr. Ball to the subcommittee. We look forward to your testimony because you have a great deal of expertise in this area. Problems in social security seem to have been developing quite a bit in recent years. We welcome you.

STATEMENT OF ROBERT M. BALL

Mr. BALL. Mr. Chairman, members of the committee, it is a pleasure to be here with the Ways and Means Committee again.

As you know, I am not a lawyer. I think I am the only one testifying this morning who is not. My testimony will emphasize the administrative side of the problems and particularly the need for urgent action to overcome the immediate backlog problem of some 107,000 cases.

I thought it might be helpful to the committee as background to remind you of a few key points about the disability process prior to the claim reaching an appeals stage. After all, 95 or 96 percent of the favorable decisions in the social security disability insurance program are made without reaching the hearing stage.

If we could raise that figure just to 97 or 98 percent, so that more of the favorable decisions that were ultimately going to be made were made at the initial level, the crisis in the appeals process would just disappear. It would greatly reduce the load.

Without demonstrating it, I think we can just take it for granted that the real appeals problem is in disability. The regular OASI program is not a problem, and the black lung program will be cleared up in a few months. It is the disability decision, both in SSI and in the contributory system, where the problem is and will continue to be.

The issue is, how can this volume be contained and still grant full and impartial hearing rights to the disability claimants?

I would like to focus on disability insurance. It is important to realize that this is undoubtedly the largest long-term disability insurance program in the world. Given the subjectivity that is involved in borderline determinations, any appeals system will run to large volume.

Our question is, does it have to be as big as it is? What we are dealing with is a program of 14 million applications or more a year in disability insurance, with 50,000 or so, around 4 or 5 percent, going to hearings.

Maybe this is the best that can be done, but I hope that every attempt will be made to increase the percentage of allowances that are made prior to hearing and reduce the percentage of cases to which claimants have to turn to the expensive and delaying hearing processes.

Now, what is the process that leads up to the hearing? From the very beginning, Social Security adopted what might be called a screening strategy so that the large number of cases that could be decided relatively easily could be handled quickly. The idea has been to pass through the screen those cases that can be allowed on reasonably objective medical evidence alone and then deal with the borderline troublesome cases with additional development and evidence.

What we have is a system where the levels of severity from a medical standpoint have been developed in considerable detail after consultation with medical groups across the country.

The agency has listed the impairments in the regulations for each major body system and combinations of body systems which are at a level where it is reasonable to assume that a person who is not currently performing substantial gainful activity is, in fact, not performing it because of these impairments. And the decision process can stop right there for those who have impairments at this level.

People with that level of severity should get paid quickly and as soon as that evidence on the medical side is developed.

On the other hand, if the level of severity falls way short of the level of medical severity established by regulation, again there is no problem, and the claim is easily disallowed. I would guess without precise figures that something over 80 percent of this huge volume of claims can be handled in this way and that the major problem that is involved both in reconsideration and then in the appeals process are those cases that fall somewhat below the medical standards. Then it is necessary to take into account the peculiar situation of the particular individual-his age, training, experience-in order to make a decision. Can it be said that even though he doesn't meet the medical standards, is he still unable to engage in substantial gainful employment? It is these borderline cases that account for the 4 or 5 percent that eventually go to hearing.

Another key decision that was made at the beginning by the Social Security Administration, and has been continued since in addition to this reliance on relatively objective medical standards for the great bulk of determinations-was that one would attempt to get medical evidence that determined the residual capacity of the individual and not rely very heavily on the opinion of physicians who had treated the individual. In order to obtain more objectivity and uniformity,

what is wanted is medical evidence that goes to the question of what the residual capacity of the individuals is; the physician's opinion that this person is disabled or cannot work is not given very much weight in the initial stages.

I might say, Mr. Chairman, that it is not a simple matter to gather this medical evidence. It is only more simple than to gather the kind of evidence required for the borderline cases. It should be emphasized, perhaps, that in order to treat a disease, it is frequently not necessary to know what degree of residual capacity the individual has. The treatment may be exactly the same regardless of an assessment of the capacity of the individual to work or not, so that many physicians just do not have the kind of evidence that is necessary for a disability program, nor are they particularly interested in it.

But with the purchase of specialist examinations, which occur in about half the cases, and a continual working with the medical profession, I would say that medical evidence, though difficult, is not our major problem. The cases that can be decided either entirely or almost entirely on medical evidence, can be decided with considerable uniformity. But there is a considerable gray area where the individual undoubtedly has a severe handicap-but short of the screening standards and where it is necessary to take into account personalized vocational characteristics.

In this gray area I don't think it should be surprising that since in the last analysis frequently what is required is a judgmental balancing of a variety of factors that initial adjudicators and hearing officers might come to different conclusions even on the same evidence. But, in fact, the way the process works, the evidence is seldom the same. By the time the claim has gotten to a hearing stage, there is almost always considerable additional evidence that has been developed, and the hearing is a de novo hearing on the basis of the condition of the individual at the time of hearing, which in many instances is a worse condition than the one that was originally adjudicated.

That is the general outline, in a very rough way, of the process. And as I say, the great majority of allowances are determined on initial adjudication or reconsideration. What is left is 4 or 5 percent which are decided favorably in the hearings and appeals process.

Yet we are dealing with large absolute numbers, and although that is a small percentage, it creates such a tremendous volume in absolute terms that the backlog of hearings and the length of time needed is completely unacceptable. On the action level it seems to me there are two stages for the committee to consider.

One is related to temporary expedients designed to get the current backlog under control as quickly as possible.

Second, a consideration of possible changes for the long run. I would hope that this committee would help the agency in relation to the steps needed to get the backlog under control quickly, and without waiting to resolve long-term issues. The Social Security Administration has testified to several things that they are doing to help with the backlog. I just want to pick out two or three to comment on quickly.

The committee could help the agency to meet the temporary situation by taking the legislative steps necessary to make all hearing officers and administrative law judges in social security able to hear

all cases. There are now three types of hearing officers, as you know: Some restricted to black lung cases, some restricted to SSI cases, and the resulting inefficiencies growing out of the inability to use the whole group of hearing examiners well hardly needs a demonstrationperhaps just an example.

Limiting the hearing officers to hearing only SSI issues just makes for a ridiculous situation, because in about half the SSI cases, the disabled person is appealing both a disability insurance determination and an SSI disability determination.

Second, I would think that a remand approach ought to be used, perhaps selectively. There are some cases that go to a hearing and there is, indeed, new evidence that might make it possible to decide favorably without a hearing.

Also it seems to me that 6 months is too long to allow an individual to ask for reconsideration and another 6 months to ask for a hearing. It seems to me that 60 days for each step would be enough time for a claimant to decide on whether or not to proceed.

I have no evidence that this has actually affected the process, but it should be kept in mind that with a contingency fee the usual arrangement, there is a monetary incentive for a representative to delay. He gets 25 percent of the final award. I have made no study whether they do cause delay, but given human nature, it may be that the representatives are not always in a hurry.

Certainly there has to be additional recruitment of regular administrative law judges. I would favor whatever is necessary to get more people on the job. If that means temporary hearing officers, but those who could hear all cases, I would be glad to have them responsible to Civil Service to protect their independence. But more manpower altogether and what manpower there is available for all cases is a key part of any temporary solution.

For the long run-turning from this special, particularly bad situation, there have been others earlier-I believe the total disability process would be improved if the State disability units were to be made a part of the Federal Social Security Administration.

Having the whole process of initial adjudication and reconsideration under a single direct line operation would help make for more uniform and consistent determinations in the borderline area at the first stages of adjudication. And the staffing pattern could be more flexible since it wouldn't be necessary to staff according to State lines under a Federal determination system.

One illustration of that: It would be easier to staff for face-to-face discussions at the reconsideration level, which the Social Security Agency is now considering. But since most State disability determination agencies are located at just one central point, it is very difficult to work out a face-to-face discussion as long as you have the State system.

For the long run, too, I would certainly hope that in SSI, whatever the arrangement is, the status of the hearing officer and the quality of the work done would be at the same level as in the insurance program. It seems to me quite unacceptable to have a substantial difference in the grade level of hearing officers based on a program.

I can see the possibility of differences in grade based on the difficulty of cases, but not on the type of program, and SSI disability deter

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