The increasing independence of the disability offices in the states has raised serious questions of program stability and claimant equity. For example, BDI issued DIL II-59 giving directions for the third and on-going phase of a concerted administrative effort to relieve cases involving potential allowances being unnecessarily delayed at the hearings level. Phase two had operated with no serious problems for several months. Although the action had escaped the attention of CSAVR, the DIL did not, and the Council requested a DVR order for state DDSS to cease and desist their activities in these claims. Not all DVR directors acquiesed. But some did. And for a time we had a situation where some states were processing remand cases while some were refusing to implement DIL II-59. The implication for involvement of legal services in bringing class action suits on behalf of claimants who are denied services because of arbitrary state interference in the federal disability system is apparent. This problem was resolved and the program direction has now been implemented by all the states— this time. The lesson, however, should not be ignored.

State administration does not advantage the claimant. It provides only complicated, confusing procedures when simplification is desirable; it wastes time when expeditious action is needed; and it drains off millions of Social Security and general tax dollars for the support of levels of state administration above the DDS, and other state agencies which are unnecessary for and unrelated to the disbility process.

The DDSS are totally federally funded, and exist solely to function in the federal DI system. If overall program improvement is to be achieved, their capacity for service in the system should be maximized for the benefit of the claimants and the program by shifting them into direct-line federal administration under BDI.

Mr. Chairman, this concludes my statement.

Thank you.

Mr. BURKE. Thank you.

Mr. Gaughan?

STATEMENT OF JOSEPH A. GAUGHAN

Mr. GAUGHAN. I am Joseph A. Gaughan, assistant director of the Bureau of Disability, State of Pennsylvania, since its inception in 1955. I do not share Mr. Brown's or Mrs. Clark's views on federalization. I don't think federalization will result in any more clear or more timely directives than we are getting now. We do have the hearing problem and I feel it is urgent to resolve it but it is also urgent to see that the pileup doesn't occur there. I am talking about better decisions at the initial and reconsideration level. I have been in this program since 1955. I have been under many pressures and sometimes the pressures result from Federal laws, sometimes it results due to economic conditions. But in times of stress, to get the job done and get the volume of the disability decisions out, quality does suffer.

I am in favor of the reconsideration and remand process being continued by the States and if we had the time factor or pressure removed, I think the quality can improve.

Claims reaching the hearing levels usually are those that do not meet or equal the severity of the medical criteria, but rather those that have some impairment and the State agency feels could perform substantial gainful activity. In this area we are dealing with the criteria. that is vague, subjectivity can enter the picture, and as long as this criteria is as vague as it is regarding the severitv-not the severity or equal severity factor, we would always have subjectivity.

At the hearing level we are asked many times to duplicate expensive medical examinations that were already in the files when it reached the hearing level. I think it is very time consuming, it is making demands on the medical community and we are getting into an issue where I feel

there should be more vocational experts up at that level rather than medical consultants.

Regarding interview by the applicant, here again we are dealing with manpower, time, and money. I don't think we should have an extensive interview at the initial level because a significant number of claims are resolved at the initial level.

However, when we do get into a reconsideration case I feel then we should have a better interview than that taken at the initial stage.

I think the State agency is the best one qualified to do it from the standpoint of knowing what the medical issues are and what information we are looking for.

In sustaining Mrs. Clark and Mr. Brown regarding their comments relating to the Privacy Act of 1974, we have had a period of 2 days to implement it and it is going to require changing about 98 different form letters and informing of physicians and things and when we write to the applicant we are advised to send him this document. I read it over and I thought if I was an applicant and see one of those I better go see an attorney.

Now the issue here is going to be delay, delay, delay, because of the fact of restrictions imposed by the Privacy Act. The State can do the job provided they are given the time and given lead time to implement what we are supposed to do.

Thank you.

[The prepared statement follows:]

STATEMENT OF JOSEPH A. GAUGHAN, ASSISTANT DIRECTOR, PENNSYLVANIA DEPARTMENT OF LABOR AND INDUSTRY, BUREAU OF VOCATIONAL REHABILITATION, DISABILITY DETERMINATION DIVISION

Mr. Chairman, I appreciate the opportunity to appear before the Subcommittee to discuss the appeals process. First, I wish to state that my appearance here is not at my request but rather at the request of the committee.

It is necessary to discuss the entire disability process in order to discuss the Hearing and Appeal process. The State Agency's ability to produce quantity decisions with quality is dependent upon the resources made available to the State Agency by the Bureau of Disability Insurance. The Federal budgetary process requires as much as eighteen (18) months prior to the fiscal year in which money and manpower is made available to the State Agency. Many times when the fiscal year begins the workload requirements are increased due to either Federal legislation and/or economic conditions. State Agency requires lead time to recruit and train staff, acquire equipment and space necessary to get the job done. During this time interval, the resources available must be used to process this increased workload. Therefore, production requirements place a strain on the quality of the disability decision. Given more time quality of the disability decision should improve but the quantity of decisions per adjudicator would decrease. Under these periods of strain, about 96% of applicants received an expeditious disability decision and appeared satisfied with the decision as about 4% filed for a hearing.

I feel that the reconsideration and remand cases should continue to be processed by the State Agency even though the State Agency would be handling the application 2 or 3 times.

The money available for consultative examination limits the extent to which the State Agency will purchase consulative examinations. The adjudicator would like to confirm medical reports from existing sources which in many cases lack the objective findings to substantiate the subjective opinions in the report. While there has been a reduction in the purchase rate of consultative examinations as a result of our efforts to get medical evidence from existing sources, there still remains the need for consultative examinations. The State Agency has been placed in the position of requesting physicians to provide the State Agency with evidence of record on SSDI claims without payment of a fee and the next day

informing the same physician we will pay if requested by the physician for evidence of record on SSI claims.

The number of persons applying for a hearing may be influenced by pressure from welfare agencies to appeal the decision and legal council in the community legal services. I also believe some reversals at the hearing level may be due to the result of coaching to the applicant by their legal council. I have publicly heard counsel from community legal services give a presentation of how to win at the hearing level. The method was not the reasonableness of the appeal but rather coaching and harrassment of the ALJ and sources that provide evidence in file and those appearing at the hearing.

The reversal rate of about 50% at the hearing level appears to be unwarranted from the point of time it took the applicant to get a decision on his initial claim. I would prefer not to call it a reversal due to the administrative procedure act. Reversals are not made on the completed file at the time the reconsideration decision was made by the State Agency. Additional evidence was secured at the hearing level and a period of up to nine (9) months has elapsed since the time of the State Agency reconsideration decision. Many of the ALJ's requests for consultative examinations are repetitious of the same body system examinations done by the State Agency at the initial and/or reconsideration level. It appears to me that in many cases the ALJ's are looking for a medical report or testimony from a medical consultant at the hearing with a statement from the physician that the individual is disabled. Leo Price, M.D. with extensive experience in administrative and occupational medicine, has written extensively about disability programs in this country and Europe has stated, "Experience and public demand have influenced a trend toward broadening the scope of invalidity or disability definitions to cover occupational and unemployment problems created by industrial technological progress and decreasing employment opportunities for older and handicapped persons." Proper evaluation of disability claims requires assimilation of complex medical and occupational data. He then proceeds to make a point that has long been recognized in rehabilitation, "Few doctors have full competence in judging the many different aspects of occupational disability as distinguished from clear-cut biologic disability."

Claims reaching the hearing level usually are not those that meet or equal the severity, but rather those that have some impairment and the State Agency felt could perform SGA. We are dealing here with a criteria that is vague and subjectivity enters the picture. As long as the existing criteria is used, the factor of subjectivity is always present. I personally feel that vocational specialists should be used to a greater extent by the ALJ's and less medical development be undertaken.

More extensive completion of the SSA-401 "Medical History and Disability Report" would be of value of the State Agency. This could be done either at the SSA District Office or by the State Agency. Here at this point the money and manpower available are factors. Extensive completion of the 401 is not required on the meet or equal severity cases. The problem is to identify the cases where an extensive 401 is necessary. I believe this should be the responsibility of the State Agency as the issue cannot be decided until the medical issue has been resolved. The Privacy Act of 1974 is an example of pressure to which a State Agency is subjected. The Act was passed in 1974. The State Agency on September 24, 1975, received an advance copy dated September 19, 1975, of SSA Disability Insurance Letter No. II-61 with instructions for implementation of the Privacy Act of 1974, effective date of implementation, September 27, 1975. In my opinion, this will require extensive and comprehensive revision of the State Agency procedure in the securing of evidence both medical and nonmedical from existing sources and through consultative examinations. If my analysis of the act and DIL procedures is correct, greater involvement of the applicant will be required. At the moment, I can invision an increase in processing time and a backlog occurring in claims pending.

This concludes my statement. I wish to thank the committee for permitting me to appear before it. I will be pleased to answer any questions the Subcommittee may have.

Mr. BURKE. Thank you.

Mr. Houben?

STATEMENT OF SIDNEY HOUBEN

Mr. HOUBEN. Mr. Chairman and members of the subcommittee, my name is Sidney Houben, director, Bureau of Disability Determinations, New York State Department of Social Services, I am pleased to have been invited to appear at this public hearing. I hope that I can contribute to improvements that may influence the entire disability process and benefit the claimants in this program. All staff in our State agency, and I am sure this is equally true in other States, are constantly aware that our function is to serve the disabled. We strive to better the system to that end.

As a frame of reference for the current status and participation of States in the appeals process, it may be useful to highlight some comparative data from New York State experience during the past three fiscal years. These are presented in detail in a table attached to my statement. They illustrate dramatic program growth and impinge upon the many other factors that affect every level of adjudication.

From fiscal year 1973, the last full year prior to SSI, to fiscal year 1975, the first full year with SSI, the actuarial workload estimates showed a percentage increase that was 41 percent below actual receipts, resulting in approved budgets and staffing that was substantially below the amounts requested Dispositions in New York in fiscal year 1975 were almost 30 percent above the estimates reaching over 323,000 claims or more than 3 times the number completed in fiscal year 1973. During this same period, States assumed additional functions, including some formerly performed by other SSA components, and succeeded in meeting shorter time-lapse pars that became increasingly important in serving the needy SSI population. This suggests that greater consideration should be given to the fiscal and administrative resources that will be needed to achieve process changes expeditiously and with optimum quality.

Time prevents me from covering all aspects of my statement. However, I would like to emphasize special interest in these areas:

First. The informal remand procedures should be continued until such time as other policies are developed, but with specified changes in the selection criteria.

Second. In order to eliminate costly administrative problems while safeguarding claimant rights, serious consideration should be given to substitution of telephone conference techniques for face-to-face interviews in reconsideration claims.

This would also add objectivity to the purposes of obtaining bona fide information and in making sound and objective decisions. The possibility should also be fully explored that this same telephonic technique could satisfy Kelly-Goldberg requirements in due process cessation interviews where the claimant is willing.

Third. The 90-day limit proposed in H.R. 8018 for State agencies may be achievable in only 85 to 90 percent of the reconsideration claims if face-to-face interviews are included.

Fourth. The specific hearing request contemplated in H.R. 8018 may be a burden to claimants unless an advocate is provided to assist. I believe Congressman Pepper made comments along these same lines this morning.

Fifth. Clarification is needed as to whether H.R. 8018 anticipates a closed record as the basis for the ALJ hearing after the State has more fully documented the claim for reconsideration based on a longer time frame and mandatory interview with the claimant.

Finally, sixth, recognition should be given to the dilemma that SSI requires even more expeditious processing than title II, while it takes longer to fully document those claims due to the absence of medical evidence of record.

Gentlemen, I will be happy to respond to any questions.

Mr. BURKE. Thank you.

[The prepared statement follows:]

STATEMENT OF SIDNEY HOUBEN, DIRECTOR, BUREAU OF DISABIITY DETERMINATIONS, NEW YORK STATE DEPARTMENT OF SOCIAL SERVICES

Mr. Chairman and members of the subcommittee, I am pleased to have been invited to appear at this public hearing on the Social Security Appeals Process. I hope that I can contribute to improvements that may influence the entire disability process and benefit the claimants in this program. All staff in our State Agency, and I am sure this is equally true in other States, are constantly aware that our function is to serve the disabled. We strive to improve the system to that end.

As a frame of reference for the current status of State Agency participation in the appeals process, it may be useful to highlight some comparative data from New York State experience during the past three (3) fiscal years, which are presented in detail in the Table attached to this statement. These are illustrative of dramatic program growth and impinge upon the many other factors that affect every level of adjudication.

From Fiscal Year 1973 (the last full year prior to SSI) to fiscal year 1975 (the first full year with SSI) the actuarial workload estimates showed a percentage increase that was 41 percent below actual receipts, resulting in approved budgets and staffing that was substantially below the amounts requested. Disposition in fiscal year 1975 were almost 30 percent above the estimates reaching over 323,000 claims or more than three times the number completed in fiscal year 1973. In addition, during this same period States assumed additional functions, including some formerly performed by other SSA components, and succeeded in meeting shorter time lapse pars that became increasingly important in serving the needy SSI population. This suggests that greater consideration should be given to the fiscal and administrative resources that will be needed to achieve process changes expeditiously and with optimum quality.

For the balance of my statement, I should like to refer to the specific items where State Agency Administrator reaction is sought in the Background Material on Social Security Hearings and Appeals that was prepared by the staff of the Subcommittee and released in Committee Print dated September 17, 1975.

1. REMAND TO STATE AGENCY.

Although initial experience has been minimal in terms of the number of cases remanded for additional State Agency action, we have experienced 23 percent reversal rates thus far (21 Title II and Title XVI cases reversed out of a total of 91 reviewed). Accordingly, we believe it would be useful from the viewpoint of reducing backlog, shortening the time for decision to the claimant in a substantial number of cases, and from the viewpoint of economy to continue this scheme until such time as other policies may be developed to improve the entire process. In this connection, we suspect that a shortened appeal period in Title II would reduce the effectiveness of the remand procedure because the vast majority of reversals thus far have been in cases where the claimant alleged deterioration of condition.

I should like to suggest that additional criteria might be utilized in selecting remand cases, which are currently limited to deterioration of condition, allegations that the duration requirements are met, or that a documentation deficiency exists. It should be noted that no cases in the latter group have as yet been remanded.

The following groups of cases may also profit from remand:

a. Childhood Title XVI Claims.-In view of the fact the SSA has drafted listings of impairments for these claims, which I understood are now in a clearance