By Nate Raymond
(Reuters) – A retired U.S. Social Security Administration administrative law judge pleaded guilty on Friday to
charges stemming from what prosecutors said was his role in a scheme to fraudulently obtain $550 million in federal disability payments for thousands of people.
David Daugherty, 81, pleaded guilty in federal court in Lexington, Kentucky, to two counts of receiving illegal gratuities, becoming the second person to admit wrongdoing in the case, the U.S. Justice Department said.
His plea came nearly a year after Daugherty was charged in April 2016 along with an attorney who advertised his services through the website MrSocialSecurity.com and a psychologist.
His sentencing was scheduled for August 25. Patrick Nash, a lawyer for Daugherty, said his client faced a maximum of four years in prison.
According to prosecutors, Daugherty was an administrative law judge for more than two decades at the Social Security hearing office in Huntington, West Virginia, where he made decisions on disability claims.
Prosecutors said from 2004 to 2011, Daugherty accepted over $609,000 in cash payments in more than 3,100 cases from Social Security disability lawyer Eric Conn of Pikeville, Kentucky, for awarding benefits to claimants the attorney represented.
Daugherty would seek out cases Conn had pending with the Huntington office, tell him what medical evidence to submit and then award benefits to Conn’s clients without holding hearings, prosecutors said.
The scheme resulted in Conn earning at least $7.1 million in fees from the agency and caused the government to be obligated to pay more than $550 million in lifetime benefits to claimants, prosecutors said.
Conn pleaded guilty in March to one count of theft of government money and one count of payment of gratuities.
Charges are pending against Alfred Adkins, a clinical psychologist who prosecutors said performed medical evaluations for Conn. He has pleaded not guilty.
(Reporting by Nate Raymond in Boston)