A former Social Security Administration judge from Huntington has pleaded guilty to taking more than $600,000 in bribes in cases involving clients of Kentucky lawyer Eric C. Conn, who is facing prison time for a scheme to defraud the government of nearly $600 million in disability payments.
The 81-year-old David Black Daugherty pleaded guilty Friday May 13, 2017 in federal court in Lexington to two counts of taking illegal gratuities. Daugherty agreed to pay the government $609,000 as part of his plea.
(Above, see Judge David Black Daugherty)
But Judge Daugherty worked for Frank Cristaudo, who was the Chief Administrative Law Judge. (CALJ).
(Above, see SSA CALJ Frank Cristaudo)
They both worked for Social Security Commissioner Michael Astrue.
(Above, see SSA Commissioner Michael Astrue)
Judge Daugherty was working to eliminate the “back log”.
The Chief Administrative Law Judge had and has day-to-day oversight of all of SSA’s’s hearing operations.
Judge Cristaudo testified before Congress that he wanted to implement a comprehensive plan to eliminate the backlog of hearings. By eliminating the backlog, he would improve hearing office productivity and the timeliness of SSA hearings and decisions.
Judges like ALJ Dave Daugherty were at the heart of his operation. He testified that he would be monitoring the workloads of these Judges and their cases carefully.
He had selected a number of excellent judges including Judge Daugherty. He needed more judges like Judge Daugherty who were well-suited to SSA’s type of work – judges who were capable of thriving under the workload demands of SSA’s high-volume, electronic hearing operation. Judge Daugherty was the most prolific high producer that he had.
After successfully eliminating SSA’s 1,000 or more day-old cases in FY 2007, he focused on reducing the 900 or more day-old cases by the end of FY 2008. He testified that he believed a backlog of aged cases interfered with the normal hearing office workflow. Productivity was up because of Judge Daugherty and others who decided cases without holding Hearings. The new judges were trained by the highest-producing judges in SSA’s ALJ corps, judges like Judge Dave Daugherty.
The complete text of Chief Judge Frank Cristaudo’s testimony can be read at:
Daugherty faces a maximum sentence of four years. Sentencing is scheduled for August 25, 2017.
The case involved thousands of clients of Conn, who also has pleaded guilty. He is scheduled to be sentenced in July and faces 12 years in prison. Conn has agreed to pay $5.7 million to the government and pay $46.5 million to the Social Security Administration.
The investigation focused on actions between 2006 and 2011, a time when Conn earned millions with Social Security cases and Daugherty became one of the most prolific administrative law judges both in number of cases over which he presided and the staggering rate at which he approved benefits, which neared almost 100 percent. He was a “high producer” for Social Security Commissioner Michael Astrue.
Conn promoted himself as “Mr. Social Security” and built a large practice from his offices along U.S. 23 in Floyd County, Kentucky, where a replica of the Lincoln Memorial still stands in the parking lot.
Daugherty allegedly assigned Conn’s cases to himself in Huntington against court policy and communicated with Conn as to what types of medical records he would need to have to approve benefits in the cases. In his criminal plea agreement, Attorney Conn said Judge Daugherty in October 2004 asked him for $5,000 to pay for addiction treatment for a family member, the Herald-Leader reported. Daugherty confirmed that account in his plea Friday, the newspaper said.
Conn then began to pay Daugherty $10,000 each month, according to the plea agreement.
At one time, Daugherty was approving benefits at a 99.7 percent rate, while the national average was below 70 percent.
The scheme came to national attention in 2013 when two employees at the Huntington Social Security office, along with some of Conn’s employees, testified before the U.S. Senate after a two-year Homeland Security investigation.
A congressional report showed Daugherty awarded $2.5 billion in lifetime benefits to Conn’s clients and others during his final years on the bench.
Beyond the abuse of federal dollars, the case continues to affect hundreds of people in western West Virginia and eastern Kentucky who went to Conn’s firm to seek disability benefits. Once criminal charges were filed against the lawyer, the Social Security Administration reviewed about 1,500 cases handled by Conn, and lawyers estimate about 800 people have lost their benefits.
Daugherty was suspended when the allegations surfaced and was allowed to retire. The West Virginia Bar Association stripped Daugherty of his law license in 2014, and he relocated to Myrtle Beach shortly thereafter. But SSA cannot take his pension away.
The Huntington native had been an administrative judge for Social Security since 1990, following a varied judicial and political career in Cabell County.
The son of Judge Russell Daugherty, he was a graduate of Marshall University and the West Virginia College of Law and was elected to the House of Delegates from Cabell County in 1968 and 1970. He served as a circuit court judge from 1978 until 1984.