Key medical evidence submitted by hundreds of disabled applicants seeking financial help from the Social Security Administration was discarded by private contractors in Chicago last year - including original documents from at least 95 Wisconsin residents, an agency report states.

The contractors who tossed the records handled evidence submitted by 1,367 people, the agency's inspector general's office reported last week. The contractors handled claims from Wisconsin, Illinois, Indiana, Ohio and Michigan from November 2002 until the contractors were suspended in May 2003.

Social Security "cannot be certain" the claimant files "were not compromised," the report states.

The Journal Sentinel reported in July that contractors hired to ease disability claim backlogs at the agency's Chicago regional Office of Hearings and Appeals threw out medical evidence belonging to hundreds of people.

Initially, agency spokesmen said an internal investigation showed "no files have been compromised." However, eight Wisconsin congressmen requested an investigation. The agency subsequently agreed that claimants whose files the contractors had handled could review their records and have an opportunity to submit additional evidence and have another hearing.

The contractors were hired to organize medical records and mark exhibits in claimant files, which administrative law judges used to determine whether a person is too disabled to work.

Loss of the documents could cost applicants the chance to receive monthly benefits of $400 to $800 or more along with paid federal health insurance.

Social Security spokesman Mark Lassiter continued to maintain Friday that no claimants have been harmed.

"There are no indications that files have been compromised," he said. "However, to ensure that is the case, we re-emphasize that Social Security has taken steps to ensure that any person whose file was handled by the Chicago contractors has been notified and given the opportunity to review their file."

As of last week, all claimants had been notified, he said.

One of the Wisconsin claimants is a Vietnam veteran who suffers from post-traumatic stress disorder and the physical pain from being shot in combat, said his attorney, David Traver.

"We got notified that this was one of the files," Traver said. "So I went and looked at it. It was a light file. There wasn't much in it. We submitted 94 additional pages of medical records for the hearing. It was very important stuff. These are records that should have been in the file but weren't."

The man waited three years from the time of his initial application for benefits until his appeal hearing, Traver said. Now he is waiting for the judge's decision.

Other findings include:

Of 1,367 claimant files the contractors handled, 495 were sent to administrative law judges for decisions before the situation involving discarded evidence was discovered in May. Of those, 45 were denied benefits. Contractors handled 203 files from Wisconsin residents, the report states, and 95 of those had original documents discarded.

Social Security employees instructed some of the people working for the contractors to toss out "duplicate or unnecessary material" when they were supposed to place those documents in the back of claimant files.

An employee in the Chicago Office of Hearings and Appeals reported seeing "trash cans and boxes full of discarded documents" in February 2003 in the contractors' work area. The report does not say whether the employee reported the situation to Social Security managers.

James Marshall, president of the union that represents about 4,700 employees of the Office of Hearings and Appeals nationwide, said the employee did report the situation to her bosses.

"When the employee brought this to the attention of management, they informed the employee that (the practice) was acceptable because they were thinking it was duplications of records," Marshall said. "They didn't realize original documents were being destroyed. It was kind of unbelievable management didn't act on it."

He said the employee became frustrated and complained to the union in May, when an investigation was launched.

Social Security employees are allowed to take claimant files home with them under a collective bargaining agreement that allows them to work from home up to three days a week.

Employees are required to safeguard the documents, but "there is no guarantee sensitive information is protected when files are transported to and from, or maintained at, an employees home," the report states.

Marshall said he still favors the policy.

"There has been absolutely no showing that documents have been compromised," he said. "We had one case nationally in the three years that we've had the policy where an employee lost a couple of claimant files. It's no different than what we lose in the office."

The manager assigned by the agency to oversee the private contractors had not received any formal training. Instead, the report states, the manager "was instructed to use a Department of Health and Human Services handbook as a reference."

The inspector general's report was the second in recent months raising questions about the Social Security Administration, which has come under fire nationally for slow response to disability claims.

An audit of the Milwaukee office in February found hundreds of backlogged cases and more than 700 pieces of unopened mail dating back months. The audit called the office the slowest in the region in deciding appeals brought by people seeking federal disability payments.

An inspector general's report on that situation released in December said the backlog of cases involving disabled people seeking help from the Social Security Administration in Milwaukee has increased 90% in the past year.

The backlog stood at 8,059 cases on Sept. 30, up from 4,237 on the same date the previous year.