Last Updated:November 21 @ 02:40 pm

FBI: Hundreds of NY public union rail workers part of $1B fraud

By Larry Neumeister

NEW YORK (AP) - Hundreds of Long Island Rail Road employees may have cheated their way to big pensions through a $1 billion fraud by paying off doctors to say they were unable to work, authorities said Thursday as they revealed that some supposedly disabled retirees were spotted regularly playing tennis and golf, shoveling heavy snow and working out for hours at a gym.

Eleven people, including two orthopedists and a former union official, have been charged with conspiracy in a decadelong fraud that authorities say poisoned the pension system used by employees of the nation's largest commuter railroad.

Janice Fedarcyk, the head of New York's FBI office, called it a "game where every retiree was a winner." U.S. Attorney Preet Bharara said the disability pension program was not designed to be "a feeding trough for the truly dishonest," but authorities say that's what happened.

Hundreds of LIRR employees falsely declared themselves disabled to collect more pension money from the ages of 50 to 65, when they would otherwise qualify for full benefits, according to a criminal complaint filed in U.S. District Court in Manhattan.

The complaint said a retired engineering manager who complained of severe hand, knee, shoulder and back pain often played tennis and golf while collecting about $105,000 yearly in combined pension and disability payments.

Another former employee said she suffered neck, shoulder and hand pain from computer work and couldn't stand more than five minutes without leg pain. She was "surveilled shoveling heavy snow for approximately one and a half hours," the complaint said. She gets about $108,000 a year in combined pension and disability payments.

The complaint said many workers who retired with disability benefits worked unusually high amounts of overtime in the five years before retirement because pensions are calculated based on earnings during that period. The heavy workloads often continued "right up until the very day when they and their physicians claimed they were utterly unable to continue doing their railroad jobs," the complaint said.

The complaint also seemed to place some of the blame for the scandal on the pension system itself, saying the "exceptionally high rate of occupational disability applications for the LIRR can be attributed to the fact that the LIRR, and the LIRR alone, offers a pension to employees as young as 50 years old." The complaint said unscrupulous employees lie about their physical condition so they can retire at an earlier age with a salary almost equal to what they got when they were working.

Three doctors, one of whom has since died, were responsible for 86 percent of the railroad's disability applications before 2008. One doctor recommended at least 839 LIRR employees for disability from 1998 to 2008, the complaint said.

Authorities said the doctors collected $800 to $1,200 in fees from each patient as they built disability cases by prescribing unnecessary medical tests and physical therapy. They said the doctors then fabricated or grossly exaggerated medical assessments and built illness narratives to show the employees were unable to work.

The criminal complaint was written by former FBI Agent Adam M. Suits, who is now a special agent with the Office of the Inspector General for the federal Railroad Retirement Board. He estimated that "the fraudulent scheme could cause the RRB to pay unwarranted occupational disability benefits exceeding $1 billion if disbursed in full."

LIRR President Helena Williams has said the Railroad Retirement Board acted as a rubber stamp without consulting the railroad.

"The LIRR condemns any fraudulent activity associated with federal disability pension benefits," Williams said, adding that the LIRR has cooperated with authorities and supports "efforts to root out fraud."

Williams told The Associated Press that workers hired since 1988 cannot retire until they are at least 55 years old with 30 years on the job. She said the railroad has conducted ethics training of all employees since 2008.

The LIRR carries about 265,000 riders daily.

In 2009, an investigative arm of Congress found that the system approved nearly 100 percent of claims filed by retired LIRR workers — a higher rate than other commuter railroads.

The complaint noted that 61 percent, or 869 of 1,423 LIRR employees, who claimed a disability pension from 2004 to 2008 were ages 50 to 55, while only 7 percent of employees at the Metro-North commuter railroad who received disability benefits during the same period were 50 to 55. Metro-North services New York's northern suburbs, while the LIRR carries passengers between Manhattan and the 110-mile island that stretches east of the city and includes Brooklyn and Queens.

A 2008 New York Times investigation prompted criminal probes.

"During my tenure as attorney general, we investigated and, exactly three years ago today, held hearings that revealed systemic abuse of the federal railroad pension system involving LIRR workers in a practice we termed 'disability by appointment,'" Gov. Andrew Cuomo said in a statement. "These arrests continue to show that we have zero tolerance for waste and fraud when it comes to pension systems."

Several commuters at Long Island's Hicksville station applauded the charges.

"They are stealing. I hope they throw the book at them," John Rodriquez said.

"It's terrible," Edward Plakstis said. "I am sick of it because I keep paying, paying, paying for someone to get rich."

___

Associated Press writers Kiley Armstrong in New York and Frank Eltman on Long Island contributed to this report.

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8 Comments

  1. onewildmanComment by onewildman
    October 28, 2011 @ 8:38 am

    I would bet this all thanks to the Union. They need to arrest these frauds and take everything they have and throw them in jail. They can workout all day long there too. Then they can pay for their stay when they get out.

    IMPEACH OBAMA NOW! ! ! ! !

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  2. Mort_fComment by Mort_f
    October 28, 2011 @ 1:46 pm

    I am jealous. I retired from the Federal government, and YES, I do have some disabilities. My wife complains that I am hard of hearing, and that may have a cause in my work around airports for the FAA. Perhaps I should ‘shop’ for the right hearing doctor. I know that my hypertension was triggered by my work too.

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    • middlegroundComment by middleground
      October 29, 2011 @ 1:08 pm

       
      Twenty five years ago I attended a thesis defense in speech therapy where the thesis topic was hearing-loss fraud. I learned that lawyers who specialize in “hearing loss” often train their clients using the same equipment used by audiologists and that this was becoming a major problem. Obviously, workman’s comp has become another opportunity area for lawyers to get rich as has almost every other government attempt to achieve fairness, to make up for past injustices and to care for those in need. No one even questioned the manner in which a former V.P Candidate had used unproven “fad science” to win massive malpractice settlements and thus divert money from medical care to his own pocket.
       

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  3. FlaJimComment by FlaJim
    October 28, 2011 @ 1:48 pm

    Union members scamming the system?  What a surprise!

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  4. texasfarmerComment by texasfarmer
    October 28, 2011 @ 1:48 pm

    Make them all pay it back and loose their pensions. That is the typical mindset of union members, New Yorkers and Yankees. .
    And I can say that as a recovering Yankee.

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  5. bna42Comment by bna42
    October 28, 2011 @ 4:16 pm

    “FBI: Hundreds of NY public union rail workers part of $1B fraud”

    Just one more example why public employees should not be allowed to organize.  The taxpayers will lose another billion plus all the legal expenses of  prosecuting these cases. 

    “. . . the railroad has conducted ethics training of all employees since 2008.”

    How interesting!  Because union employees are taught to be dishonest, the employer has no recourse but to offer “ethics training”.  Ethics such as honesty, and integrity are individual traits which cannot be learned in a classroom.

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  6. Spiritof76Comment by Spiritof76
    October 28, 2011 @ 7:33 pm

    We are repeatedly lectured by the goons of the unions that “the middle class working people” are getting shafted by the greedy rich persons in this country.  This story illustrates that goons of the unions are the ones that are greedy, untrustworthy and have no self-respect.  They are the true railway robbers. We must get rid of the cancer of our society-forced union thuggery.

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  7. Pingback: FBI: Hundreds of NY public union rail workers part of $1B fraud | Pick's Picks of the Day

  8. patrick oconnellComment by patrick oconnell
    July 6, 2012 @ 5:26 pm

    I had a NY state parks pass that allowed free access to those with a disability. This was taken away 2 years ago due to the hundreds of LI railway workers who had obtained them by claiming they were disabled, but they were well able to golf 18 rounds with the greens fee’s paid for by hte taxpayer.

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