In Appalachia, A Lawyer’s Vast Fraud Dogs Destitute Clients

By Andrew Strickler | July 14, 2019, 8:02 PM EDT

The massive Social Security fraud committed by attorney Eric Conn has left thousands of people trying to convince the agency to restore their disability benefits. (AP)

By the summer of 2007, Johnny McIntosh could barely walk, much less hold down a job.

At just 40 years old, McIntosh had a back injury from a public works job in his native eastern Kentucky, followed by a re-injury, debilitating pain, depression and suicide attempts.

His application for federal disability benefits, arranged through a flamboyant but well-regarded local lawyer named Eric Conn, was quickly approved. For years, McIntosh lived on a monthly check that by 2016 had grown to $733.

But that May, a letter from the Social Security Administration informed him that his financial lifeline was being cut, and that all his medical records approved by a doctor Conn sent him to were being treated as fraudulent. Conn, it turns out, had been running the largest Social Security scam in U.S. history.

Today, McIntosh is one of thousands of people still trying to extricate himself from the rubble of Conn's racket — which included bribing an administrative judge to rubber-stamp benefit applications and paying off doctors — and convince the agency to restore their payments.

Now living as a squatter in a cabin without electricity owned by a relative, McIntosh has sold most of his possessions and says he feels "much older" than his 52 years.

"For a long time, it felt like I was being accused of stealing. I got harassing letters. There was a time the SSA was saying I owed them $70,085, plus a nickel," he told Law360. "I'll never forget that number."

Four years have passed since the revelations of Conn's fraud led to the sudden suspension of checks for hundreds of people who came through Conn's wildly successful Social Security practice, at one time the largest in the state.

But despite a massive pro bono effort to help his former clients navigate the ensuing red tape, those same people are still fighting to convince the Social Security Administration — which effectively deemed every document Conn ever submitted tainted — that they played no part in Conn's scheme.

"So many feel like they were first victimized by Conn and his fraud mill, and then again when they were denied a chance by the SSA to show that they had legitimate disabilities all along," said attorney Arpit Garg of WilmerHale, who leads an appellate effort for Conn's ex-clients.

With Conn now behind bars, Garg and others said his clients have been left to struggle through a flawed process with the SSA for assessing their true eligibility for benefits and a series of tough legal cases addressing how their cases should be handled.

Even a recent Sixth Circuit decision holding that the agency's "redetermination" process was flawed — a decision many believed would convince the agency to rethink its approach — hasn't stopped the SSA from arguing that other courts shouldn't adopt it.

"It took three years to get the Sixth Circuit to say the [benefits review] hearing process was unconstitutional, but still it refuses to reinstate benefits and is trying to limit the pool of people who will get a new hearing," Garg said.

In many ways, the Conn case has all the trappings of a Hollywood legal drama.

Working initially from a trailer in Stanville, Kentucky, Conn built through the 2000s a hugely profitable benefits practice, advertising himself as "Mr. Social Security" on billboards and in TV ads.

But Conn's near perfect record of securing disability benefits for thousands of clients and earning fees — the federal government shelled out some $23 million in fees to his firm over a decade — was the result of hundreds of thousands of dollars in bribes he paid to an administrative law judge who funneled Conn's applications to himself and ruled in his favor, officials later learned.

Conn also paid doctors to perform sham exams and to sign documents Conn prefilled to ensure approval, including the physician who gave McIntosh a physical to support his application.

Federal officials later said the scheme defrauded the government out of $550 million.

Conn pled guilty in 2017, but he cut off a monitoring bracelet before he was sentenced and wound up on the FBI's Most Wanted list. Six months later, he was captured at a fast food joint in Honduras and returned to the U.S. He is now serving a 12-year sentence in a West Virginia federal prison for the fraud and related crimes, to be followed by a 15-year sentence for his escape.

While the colorful aspects of the Conn debacle have gotten considerable media attention, attorneys and others involved say they have obscured some of the immense human costs of his actions and the SSA's troubling reaction.

That fight began suddenly in mid-2015. As the full scope of the Conn fraud came into view, the SSA sent out hundreds of benefit suspension notifications to people around the Appalachian region who had gone to Conn.

Those letters sent a shock wave through the region, triggering lawsuits, an arduous administrative process, and the kickoff of more than 1,500 "redetermination" hearings to assess beneficiaries' disabilities that began late that year.

In the first round of hearings, about 800 people lost their benefits altogether and 700 were able to keep them. A second round of hearings last year also went badly for many Conn clients — some represented by volunteer lawyers, others without representation altogether — as officials continued to treat virtually all old records Conn or his cohorts prepared as irredeemably tainted.

Kentucky attorney Ned Pillersdorf of Pillersdorf DeRossett & Lane, who represents former Conn clients and has been instrumental in marshaling a massive pro bono effort, said the difficulty of showing their disabilities were legitimate — notwithstanding the fraud committed by Conn and his associates — was simply insurmountable.

In many cases, Conn's clients didn't have regular doctors or health insurance, and handed over to Conn whatever records they did have. Conn himself destroyed piles of records as authorities closed in, amplifying a documentation problem that still plagues the group.

The agency has shown a "lack of compassion" throughout the Conn fiasco, Pillersdorf said, and clung to administrative rules that were never designed to deal with a fraud of this magnitude. A few of Conn's victims committed suicide after losing their benefits, he said. Others have been forced from homes or deep into debt.

"The worst you could say about what these people did is that they trusted the best known and biggest Social Security lawyer in the area, and this is the mess they were left with," he said.

An SSA representative did not respond to requests for comment.

The Conn fraud has also created a complex legal landscape involving obscure administrative rules; lost or outdated records; and various subsets of far-flung litigants in several states. Finger-pointing also continues over a large cache of old records found last year in a Conn office complex that could help some redocument old disability claims.

Amid a flurry of Conn-related lawsuits and appeals to the SSA, two federal judges in Kentucky backed the constitutionality of the agency's approach to redetermining Conn clients' benefits and subsequent revocations. But claimants have scored some victories as well.

The Sixth Circuit, considering a consolidated appeal, backed the decision of a third Kentucky district judge who'd agreed strongly that the due-process rights of a group of Conn clients had been violated.

One of the plaintiffs in that case, Amy Joe Hicks, had undergone an initial exam by a doctor later convicted in the Conn scheme. Although her mental impairment was also documented by a different, SSA-retained doctor, she was still denied a full reinstatement of benefits at the post-Conn hearings because her initial mental exam, which found a more profound disability, was discounted.

In November, the appeals court affirmed the lower court's summary judgment decision, saying Hicks and others never had a real chance to rebut the accusation they'd been "leeching government resources to which they had no right" for as long as 10 years.

The plaintiffs had requested new hearings to determine if and where their benefits file bore evidence of fraud, but the SSA argued that doing so after so much time had passed would be too burdensome. That position didn't hold water with the court.

"We are particularly unpersuaded by the SSA's timing claims, given that the SSA waited nearly ten years after first learning about possible misconduct involving Conn and Daugherty to initiate redetermination proceedings," the court said.

That forceful decision, Garg said, "raised some hope" that the agency would quickly revamp the hearing process, and re-start benefits.

So far, that hasn't happened, and Conn's clients remain in legal limbo.

In a Kentucky federal court, where plaintiffs in a proposed class action are trying to enforce the Sixth Circuit decision for all 2,900 people caught in the redetermination process, the government is simultaneously trying to water down the potential fallout from Conn-related litigation and pledging to fix the process.

In a June 13 filing, the government also urged the court to deny the plaintiffs' request to include in the case those who had been through the hearings but had not gotten a final decision. The agency also said it intended to cure the redetermination "infirmities" for those with "live" claims.

Garg and other plaintiffs lawyers noted that the agency still hasn't said who it believes has a "live" claim, set a timeline for new hearings or indicated whether it would start paying interim benefits in the meantime.

In related cases outside the Sixth Circuit, the agency also continues to argue that courts there should not follow the Sixth Circuit decision, raising the possibility that the government's long-term strategy is to stall in Kentucky, create a circuit split, and then appeal to the high court.

"The whole thing has just felt very Orwellian," said attorney Evan Smith, the lead counsel in the Hicks case and director of advocacy for AppalRed Legal Aid in Prestonsburg, Kentucky, which has been the center of Conn-related pro bono work.

So far, some 150 volunteer attorneys from more than a dozen states have represented Conn clients at administrative hearings and in related cases, Smith said. Separately, Garg and eight other current and former WilmerHale attorneys have put in more than 1,880 hours on Conn-related work.

"This is an area where people don't have pensions, maybe they only have a high school diploma, and this experience has left them feeling like the SSA never really tried to give them a fair shake," Smith said.

McIntosh, who is among the named plaintiffs in the Kentucky suit, said that after all these years he isn't pinning his hopes on the courts or the SSA.

In August, he's scheduled to go before an administrative judge as he appeals a denial of his post-Conn "do over" application for benefits based on his current disabilities.

Like many of Conn's client-victims, McIntosh maintains he never even met "Mr. Social Security" in person, and certainly never knew anything about a fraud mill when he called a number off a billboard.

"My situation, it's been real all along," he said.

--Editing by Brian Baresch.

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