Profiting from the welfare state

From one point of view, Eric C. Conn is an American success story. He opened his business in a trailer in tiny Stanville, Ky. With a keen eye on the main chance, he grew it into a juggernaut. It became one of the leaders in its field, employing dozens of people and even opening a satellite office in Beverly Hills.

All this would be very inspiring if Eric Conn’s business didn’t exist as a barnacle on the Social Security Administration. His law practice specializes in extracting (often dubious) disability benefits for his clients from the United States government, and enriching himself and people around him in the process. In his book on the excesses of the American welfare state, Nicholas Eberstadt remarks that loose government rules and generous benefits tend to make us “a nation of chiselers.” If an exhaustive new Senate report on Conn’s operation is to be believed, he is truly a lawyer for our age.

Conn spread the word of his services through that indispensable marketing tool of the American bar — the highway billboard, supplemented by TV advertisements and “Conn Girls” who attended events wearing shirts emblazoned with his firm’s logo. He marketed himself as Mr. Social Security.

In 1960, fewer than 500,000 people received disability payments. Now, the Social Security Administration disability program pays benefits to 12 million people. Many of these recipients are worthy and deserve help, and the aging of the population has been a factor in this growth. But an increasing number of claims involve subjective, difficult-to-disprove ailments, like mood disorders and back pain, obviously creating potential for abuse.

An administrative law judge told “60 Minutes,” “If the American public knew what was going on in our system, half would be outraged and the other half would apply for benefits.”

Counselor Conn would be happy to take their cases. He is to disability payments what Perry Mason was to criminal defense. He has had an amazing knack for getting his claimants approved, and making millions from it. The Social Security Administration pays lawyers for successful claims from the back-pay benefits. Conn got $3.9 million in fees in 2010 alone, when he was the third-highest-paid disability lawyer in the country. Not bad for a little ol’ country lawyer in Stanville.

As the Senate report notes, though, Conn had friends in high places. An administrative law judge in the Social Security Administration’s Huntington, W.Va., office, Judge David Daugherty, handled as many of Conn’s cases as he could. The report found that Daugherty gave Conn’s office a list every month of claimants he planned to bless. Conn’s office reportedly filled out the medical forms that were signed by doctors paid by Conn, to the tune of $2 million over the past several years.

Then, Daugherty approved them — every time. He never turned down anyone represented by Conn, and, as a general matter, was an approval machine. In 2009, according to the report, he approved 1,410 claims out of 1,415 total, and in 2010, 1,371 out of 1,375. The norm for such judges was to hear only about 600 cases a year and approve 60 percent of them. The last few years of Daugherty’s career — he has since retired — he awarded $2.5 billion in lifetime benefits, the report estimates.

Oddly enough, the judge and his daughter received nearly $100,000 in unexplained cash deposits in their bank accounts from 2003 to 2011. When The Wall Street Journal wrote about the relationship between Conn and Daugherty a few years ago, the lawyer’s office got multiple disposable cellphones so the lawyer and judge could keep talking and took a shredder to a warehouse of documents.

Eric Conn’s legal fate is unknown. He is being sued for fraud, and he refused to testify at a recent Senate hearing. In the spirit of George Plunkitt, he seen his opportunities and he took them. Those opportunities came courtesy of the heedlessness of the contemporary welfare state.

Rich Lowry can be reached via e-mail: comments.lowry@nationalreview.com.

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