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O'REILLY: "Back of the Book" segment tonight, the big disability con. Last Sunday, "60 Minutes" reported on it. But we have been telling you about this situation for years.

Twenty years ago, in June 1992, there were 3,300,000 Americans receiving federal disability payments. Today, 20 years later, that number is a record 8,733,000 workers on disability.

So, why has the disability rate increased more than a hundred percent. I'll tell you why. It's a con. It's easy to put in a bogus disability claim.

Yesterday, a Senate sub-committee, headed by Tom Coburn of Oklahoma, released a report that says many disability claims are fabricated. The question tonight is, why is this happening.

Joining us from Austin, Texas, Fox News Analyst, Karl Rove. So, why, Mr. Rove.

KARL ROVE, FOX NEWS ANALYST: Because people can do it. I mean, in Senator Coburn, they randomly chose 300 applications that had been approved and found evidence in a quarter of them that there was fraud. I mean, the case that Coburn puts a spotlight on involved an administrative law judge who's the person who has to grant these applications, who was in bed with an attorney who had a mill that literally prepared these applications, bought off doctors, five doctors, in order to give the diagnoses. And then, they coordinated their schedules. And this administrative law judge just, you know, rubberstamped his applications.

O'REILLY: Every one of them, a hundred percent according to "60 Minutes."

ROVE: Right.

O'REILLY: This was in West Virginia. There's the attorney.

ROVE: Yes, well let's be -- yes, let's be fair to him.

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Out of nearly 1,400, he did disallow four.

O'REILLY: Four.

ROVE: Now, this is -- four. Now, this is probably what brought him to the attention of the inspectors at the Social Security administration because it was such an anomaly.

But the lawyer got paid nearly $5 million. The judge may have gotten paid $2 million. They put a lot of money into the pockets of doctors.

O'REILLY: How did the judge get paid though. The judge is not --

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-- how did he get paid.

ROVE: Sure, he gets paid. He just got paid.

O'REILLY: How.

ROVE: Well, he got cash from -- we'll find out more in the trial.

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But he apparently got paid in cash by the lawyer at the end of this deal when --

O'REILLY: So, we can bribe.

ROVE: We can bribe. And, look, this is not the only instance. For example, in August, 75 people were indicted in Puerto Rico, one former Social Security Administration employee, three doctors, and 71 claimants.

A former Social Security employee got paid up to six grand to fill out the -- to get you the bonus application. The doctors got paid $500 each in order to give you the phony diagnosis.

Most of them said they were mood disorders. And these people got all accepted.

O'REILLY: All right. So, how did they get so out of control. Here on Long Island where I live, we have the Long Island railroad. It's like 70 -- I mean that's a huge scandal. Billions of dollars involved.

ROVE: Yes.

O'REILLY: Almost every single person who worked for the railroad was out on disability. How did it get so far out of control.

ROVE: Well, I listened to what you and Stossel said earlier. But, look, private insurance companies have a financial necessity of making sure they stop fraud.

There are no fraud protections in Medicare, Medicaid, Social Security. None.

O'REILLY: Right.

ROVE: In fact, there's an estimate that Medicare expenditures -- the FBI is responsible for Medicare fraud. They estimate 15 percent of the cost of Medicare is involved in fraud.

We spent a hundred and thirty-five day and dollars in 2012 on this disability program. And if Coburn is right, that a quarter of that is fraud, we're talking about spending about $40 billion in fraudulent payments.

And it's worth it to the goverment to put some money into fraud. Look at this pattern, Bill. This ought to nerve you.

From 2001 to 2008 versus 2009 and 2012, the number of applications for the Social Security Administration Disability program are up only six percent.

The approvals are up 45 percent. Now, part of this is because we do have an aging population and we also have a lot of women who work in the workforce, who are aging.