Eric Conn ordered to pay $31 million to government, whistle-blowers in fraud case

April 05--A judge has ruled that embattled disability attorney Eric C. Conn should pay $31 million in damages and penalties to the federal government and two former Social Security Administration employees who tried to blow the whistle on his fraudulent conduct.

U.S. District Judge Amul Thapar ruled in the case after a hearing Tuesday, said Mark Wohlander, who represents the whistle-blowers.

The government had sought a total of $31.4 million in the case -- $12.2 million in damages and $19.2 million in penalties, based on the maximum penalty of $11,000 for each of the 1,746 fraudulent claims it identified.

Conn's attorney, Scott White, said that while he respects Thapar's decision, Conn may appeal the judgment. Conn, who lives in Pikeville, won disability checks for thousands of people in Eastern Kentucky.

Judgments against Conn are piling up, however, so it's not clear how much of the money the whistle-blowers can collect.

Conn pleaded guilty March 24 to stealing from the Social Security Administration and paying bribes to a judge.

That deal calls for him to pay the government $5.7 million, representing the amount of fraudulent fees he got, and reimburse Social Security $46 million it paid in disability claims in which Conn used fraudulent information.

Conn admitted he submitted false medical information in seeking disability checks for more than 1,700 people, and said he paid about $10,000 a month to an administrative law judge, David B. Daughterty, who rubber-stamped claims for Conn.

Wohlander said his clients, Jennifer Griffith and Sarah Carver, deserve compensation for their longstanding efforts to expose the wrongdoing.

Both worked at the Social Security appeals office in Huntington, W.Va., where Daugherty worked, and they repeatedly told superiors and others about the alleged impropriety.

If the Social Security Administration investigated the allegations properly, the fraud could have been rooted out earlier, Wohlander said.

"This did not have to happen."

Griffith said she thinks the Social Security Administration didn't treat the complaints as it should have because Conn completed far more cases than other administrative law judges, helping the Huntington office look good on production goals.

One reason Daugherty completed more cases was because he issued decisions in many of Conn's cases without holding hearings.

Griffith said she and Carver faced retaliation for reporting suspected wrongdoing in the Huntington SSA office.

A supervisor issued unjustified warnings about her performance and began following her around the office and to the bathroom to time her activities, Griffith said.

Griffith said she ended up on anti-anxiety medication and multiple blood-pressure medications. After the supervisor said she intended to get rid of Griffith, Griffith left the agency in October 2007, but continued working with Carver to bring attention to the issue.

Griffith said she didn't find another good-paying job for years. She lost a car and almost lost her house.

As for Carver, a former head judge in the Huntington office, Charlie Paul Andrus, pleaded guilty in federal court to taking part in an effort to discredit her in 2011 and 2012, after a Wall Street Journal ran a story raising questions about Daughterty and Conn.

Andrus met with Conn and they decided to have Carver followed to try to document her abusing a policy that allowed employees to work outside the office.

Andrus had another employee give Carver's schedule to Conn, and Conn paid someone to follow her and try to videotape incriminating evidence, even submitting a faked tape at one point, according to court records.

Andrus has not been sentenced.

The $31 million judgment entered against Conn this week was in a false-claims lawsuit Griffith and Conn filed against Conn and Daugherty. In those lawsuits, whistle-blowers are entitled to a share of what the government collects.

Wohlander said their efforts also ultimately led to the criminal case against Conn.

Wohlander said they hope to work out a settlement with the government for a share of what it collects.

Griffith said she understands she and Carver may end up with little money despite the judgment, but that they didn't go into the case looking to enrich themselves.

"We wanted to see it stopped and we wanted to see the appropriate people punished," Griffith said. "I couldn't have lived with myself if I'd let it go."

Conn also faces a lawsuit in Floyd County in which former clients accuse him of malpractice and illegally collecting attorney fees. It is a class-action complaint that covers about 1,500 people, said Ned Pillersdorf, who is handling the case.

Pillersdorf said one potential source of money in that case is Conn's malpractice insurance.

However, the company has denied to cover Conn on the malpractice claim. Conn is suing to force it to pay.

Bill Estep: 606-678-4655, @billestep1

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