In testimony more befitting a legal thriller than a congressional hearing, Social Security employees told the Senate on Monday of an agency office in West Virginia rife with intimidation, retaliation and corruption — including a successful scheme that allowed a lawyer to bilk more than $4 million in taxpayers’ money from the disability system.
Four current and former female employees in the Huntington office told of being stalked and videotaped and having to defend themselves against fabricated charges of misconduct while trying to expose the multimillion-dollar racket.
The scam was able to operate under the nose of the agency because of quotas that required a certain number of cases be processed — and agency employees who looked the other way, the women said.
“That’s pretty stunning testimony, I’ve got to tell you,” Sen. Carl Levin, Michigan Democrat and chairman of the Senate’s chief investigative subcommittee, told the four women as they laid out details of being followed by a private investigator, or facing retaliation in their jobs, and of cloak-and-dagger tactics the scam organizers used to try to hide what they were doing.
In a report led by staffers for Sen. Tom Coburn of Oklahoma, the ranking Republican on the Homeland Security and Governmental Affairs Committee, investigators detailed what amounted to a disability case mill that churned out potentially bogus approvals in hundreds of cases.
The investigators said Eric C. Conn, a Kentucky lawyer who billed himself as “Mr. Social Security,” colluded with Administrative Law Judge David B. Daugherty and several doctors to manufacture medical evidence that applicants were too disabled to work, and then use the fabricated evidence to justify approvals.
Employees in the Huntington office testified that Judge Daugherty would go into the computer system and reassign Mr. Conn’s cases to himself, and he would approve them, amassing the third-highest number of cases of any administrative law judge.
Called before the committee to testify Monday, Mr. Conn refused to answer questions, citing his Fifth Amendment right against self-incrimination.
“I respectfully assert my constitutional right not to testify here today,” he said.
Judge Daugherty defied a committee subpoena and failed to show up when the time came for him to testify. Committee Chairman Thomas R. Carper, Delaware Democrat, said he would consider the appropriate steps to take to enforce the subpoena.
The case came to the attention of investigators after a 2011 Wall Street Journal article identified Judge Daugherty as having cleared a near record number of cases and approving more than 99 percent of them for disability.
The employees who testified said the fraud they saw should have been obvious to others at the Huntington office.
Mr. Coburn said the case exposed failures up and down the system, including within Congress.
“For a long time, Congress has acted as if getting people into the program is more important than doing oversight of the program,” he said.
Social Security’s disability program has come under increasing scrutiny as the number of people earning disability has jumped faster than normal population and workforce growth, to reach 8.8 million beneficiaries in 2012.
Several high-profile disability fraud cases have contributed to concerns.
In this latest case, the whistleblower employees painted a picture of a system out of control and more focused on meeting numerical quotas than in getting decisions right.
Sarah Carver, a senior case technician at the Huntington office, testified that the judges would approve cases in one month but not finalize them because they already had met that month’s quota. Instead, they would “bank” the other decisions for the next month — which meant disability beneficiaries ended up waiting for checks that the agency already determined they deserved.
After Mr. Conn and Judge Daugherty began to suspect she had been a source for The Wall Street Journal report, Ms. Carver said, she faced brutal retaliation, including a private investigator who was hired to follow her and try to catch her violating agency telework rules.
Members of the committee said that when they couldn’t find evidence, they tried to fabricate it.
“Management has been allowed to harass, intimidate, stalk, discipline, ostracize, monitor and make my life as miserable as possible for the last seven years,” Ms. Carver testified. “I still fear for my safety and the safety of my family.”
The cover-up of the racket, as described by the women, was just as stunning.
The employees said the agency office began to destroy computer hard drives by smashing them with hammers and later burning them, and shredding mountains of documents.
The employees also said the two key people in the scam, Mr. Conn and Judge Daugherty, bought disposable cellphones so their conversations couldn’t be tracked. At one point, one of the employees said, the judge called the lawyer from a non-disposable phone and they had to go out and buy new phones because the errant phone call had created a connection that made the old phones toxic.
In an emailed statement to The Washington Times, Social Security spokesman Mark Hinkle said privacy laws prevented the agency from talking about specific personnel matters in the Huntington office, but said the agency doesn’t tolerate retaliatory behavior.
“It is the policy of the Social Security Administration to maintain a work environment that is free from harassment or retaliation,” he said.
The agency declined to send witnesses to testify at Monday’s hearing in the middle of the government shutdown, but Mr. Carper said the government witnesses would testify once the shutdown ends.