I think that most people outside of NY are unaware of this massive disability Fraud scam:
Prosecutors: $1 Billion Scam Derailed
Retirees From Big Commuter Railroad Accused of Disability-Pension Fraud
By CHAD BRAY and ANDREW GROSSMAN
Eleven people, including two doctors and seven retirees, participated in a long-running disability-pension scheme that had the potential to defraud the U.S.'s biggest commuter railroad of up to $1 billion, federal prosecutors in New York said Thursday.
Eleven people have been charged in an alleged disability-pension fraud scheme involving employees of the Long Island Rail Road that prosecutors say could have topped $1 billion if fully paid out. Andrew Grossman has details on The News Hub.
The scam allowed hundreds of Long Island Rail Road employees to retire as early as age 50 with combined pension and disability payments that in some cases added up to the salary they had received when they were working, prosecutors said. Some of the employees charged, who had claimed to be disabled, were seen doing things that would seem to be precluded by their purported ailments, like playing golf and tennis, prosecutors said.
The LIRR has long grappled with a patchwork of federal regulations, contract provisions and union work rules that contribute to costs per employee that are higher than other units of New York's mass-transit operator, the cash-strapped Metropolitan Transportation Authority.
The federal probe that led to Thursday's charges came after the New York Times reported in 2008 that nearly every career LIRR employee was declared disabled by the Railroad Retirement Board, a federal entity created in the 1930s that oversees the industry's retirement and disability benefits. The benefits are funded through taxes on the railroads and their workers.
Preet Bharara, the U.S. attorney in Manhattan, said the benefits program was "designed to be a safety net for the truly disabled, not a feeding trough for the truly dishonest."
Mr. Bharara said those charged represented the most egregious cases officials had located, but officials are exploring the possibility of additional criminal and civil actions. The investigation is continuing, he said.
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LIRR President Helena Williams, who called for the federal probe after the New York Times report, said she hoped the charges "send a strong message to those who seek to defraud this important federal program."
Peter J. Ajemian, an orthopedist formerly employed in Rockville Centre, N.Y., and Peter Lesniewski, another orthopedist, combined recommended disability benefits for at least 956 LIRR employees between 1998 and 2008, prosecutors said. Together with another doctor, they accounted for 86% of the LIRR disability applications filed during that period, prosecutors said.
A criminal complaint said the doctors prescribed a series of unnecessary medical tests, including X-rays, scans and nerve-conduction tests and physical therapy. The employees generally paid the doctors between $800 and $1,200, often in cash, to prepare for the medical assessment.
The complaint said Dr. Ajemian received $2.5 million in direct payments and insurance billings from 453 LIRR patients between September 2004 and 2008, resulting in more than $90 million in disability payments.
Dr. Lesniewski is estimated to have received $750,000 in direct payments and insurance billings from 134 LIRR patients during that period, resulting in more than $31 million in disability payments, prosecutors said.
The $1 billion figure cited by prosecutors as the possible total cost of the fraud includes all the benefits workers involved with the three doctors are slated to receive. It isn't clear how many of the claims are fraudulent, or whether prosecutors would be able to recoup some of the funds.
Under a Microscope
Prosecutors allege that former LIRR workers used fraud to obtain disability payments. Among the disability filings and accusations by prosecutors:
- Disability: Severe pain when gripping and using simple hand tools and pain in knees, shoulders and back from bending or crouching
Prosecutors say: Defendant signed in to play golf at a course 140 times over nine months in 2008.
- Disability: Activities such as walking and standing cause 'disabling pain' and stairs are 'very difficult.'
Prosecutors say: Defendant was seen vigorously exercising at a gym for more than two consecutive hours, including a step-aerobics class.
- Disability: 'Disabling pain in back, shoulder & legs'
Prosecutors say: Defendant completed a 400-mile bike tour in 2009.
Source: criminal complaint
Joseph Ryan, a lawyer for Joseph Rutigliano, a defendant who worked as a union president and LIRR conductor, called the criminal complaint "a masterpiece of creative writing." Thomas E. Engel, a lawyer for Dr. Ajemian, declined comment after a bail hearing late Thursday. A lawyer for Dr. Lesniewski didn't respond to a request for comment.
The LIRR employees also allegedly paid a small group of "facilitators" to assist with the disability process, prosecutors said.
Between 2004 and 2008, 61% of the 1,423 LIRR workers who retired and began receiving some form of Railroad Retirement Board benefits were between 50 and 55 years old, prosecutors said. By comparison, only 7% of 61 people who retired from the LIRR's sister railroad, Metro-North, and started receiving benefits were between 50 and 55 years old during that period, prosecutors said.
Prosecutors alleged that one of the five railroad workers charged Thursday annually receives about $105,000 in combined pension and disability payments and claimed he had suffered severe pain when gripping and using simple hand tools. However, the retired engineering manager allegedly played tennis several times a week and signed in to play golf at a particular course on 140 days over a nine-month period in 2008, prosecutors said.
Another retiree—a former LIRR signal operator—claimed he was unable to do any physical labor because of "severe and disabling pain in [the] back, shoulder & legs," but completed a 400-mile bike tour in northern New York in 2009.
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