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Lawsuit accuses two of fraud

Feb. 19, 2013 @ 11:00 PM

HUNTINGTON — A former local judge and a Kentucky attorney are accused of defrauding the federal government out of millions of dollars in a lawsuit filed by two Social Security Administration employees who worked in the judge's office during the alleged fraud.

The lawsuit, which was filed in October 2011, was unsealed Tuesday in federal court in Pikeville, Ky.

In the lawsuit, Eric C. Conn, a lawyer based in Stanville, Ky., and David B. Daugherty, a former administrative law judge with the SSA's office in Huntington, are accused of engaging in a scheme to defraud the United States' Social Security disability programs through Daugherty's awarding of disability benefits to claimants represented by Conn.

Attempts to contact Conn at his law office were unsuccessful Tuesday. Messages for Daugherty were not immediately returned.

The SSA's Huntington office is responsible for hearing appeals in disability claims from people in eastern Kentucky and western West Virginia.

The lawsuit, which was filed by attorneys in Lexington and the District of Colombia, seeks to recover money from Conn that he allegedly received as a result of the fraud under the federal False Claims Act. No criminal charges have been filed.

Daugherty, who served as a Cabell circuit judge prior to serving as an administrative law judge, retired from his administrative law position in July 2011 amid a federal investigation into criticism that he awarded disability benefits in a high percentage of Social Security appeals. A report by The Wall Street Journal in May 2011 revealed he approved 99.8 percent of disability cases brought to him between September 2009 and March 2011.

Local analysis showed Daugherty's 11 colleagues in the Huntington SSA office had an average approval percentage of 71.1 percent during that time frame. Their individual rates ranged between 45 and 85.9 percent.

The WSJ report also questioned Daugherty's ties to Conn, noting Daugherty frequently assigned himself to Conn's cases.

The plaintiffs in the suit, Jennifer L. Griffith and Sarah Carver, each began working at the Huntington office in September 2001, and Griffith resigned from her post as a docket clerk in November 2007.

The lawsuit alleges Daugherty reassigned a high number of cases handled by Conn to himself, which was in violation of a rotational requirement in which cases from Conn's office were to be rotated equally between all of the judges due to the high volume of case filings from Conn's firm.

Once Daugherty was residing over a Conn claim, the lawsuit alleges, Daugherty would host sham hearings before awarding benefits to the claimants without justification.

In a May 2011 interview with The Herald-Dispatch, Daugherty attributed his high approval rate to his willingness to take on more cases than other judges. He said he used discretionary methods, which had been urged by the SSA, to reduce the agency's backlog of cases.

"It's like anything in life. You hit enough tennis balls -- you're going to start hitting them better," he said in the 2011 interview. "You know what a document looks like before you even look at it. You therefore know that's not a document you need to necessarily consider, but it takes a while to grasp that and to get better at it."

The federal government had been given an opportunity to intervene in the lawsuit against Conn and Daugherty, but opted not to. The reasons for the government declining to join the suit were not made public.

The Associated Press contributed to this report.

Follow Lacie Pierson via Twitter @LaciePiersonHD.

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