Federal prosecutors brought charges against ten additional retirees of the Long Island Railroad, who are accused of filing fraudulent disability claims in order to boost their pension payouts. So far, 21 have been charged a “massive fraud scheme,” including two physicians.
If the scheme had gone undetected, it could have led to over $1 billion in excessive federal disability payments.
LIRR president Helena Williams has notified employees that provisions in the benefit contract that allow the railroad to cancel all benefits "when fraudulent activity occurred while an active employee." She reiterated that the pensions of employees who take the immunity deal offered by prosecutors will be not be putting their pensions at risk. While the investigation continues, the authorities have offered amnesty to retirees who willingly come forward by July 6, and there people will be able to keep the payments they’ve received so far. However, employees who wait for the Aug. 10 deadline will be forced to forfeit half of the benefits they have received so far.
Orthopedists Peter J. Ajemian of Syosset, and Peter J. Lesniewski of Rockville Center were charged in October 2011 for running “disability mills.” According to prosecutors these two men, and a third doctor who has since died, are responsible for 86 percent of the LIRR’s disability applications filed before 2008.
The Long Island Railroad allows for pension benefits for employees hired before 1988 who have worked for the railroad for 20 years at age 50, the youngest age allowed by any commuter rail in the nation. A federal agency called the Railroad Retirement Board, pays both a disability pension for employees unable to work, as well as a regular pension beginning at age 65. For LIRR retirees receiving both a regular pension and a disability pension, benefits can come close to their base-salary.
Compared with Metro-North Railroad, where 7 percent of of employees aged 50 to 55 stopped working and received disability payments from 2004 to 2008, 61 percent of LIRR retirees filed for disability during the same time period. Prosecutors have also said that many of the retirees receiving disability pensions were found to have highly physical hobbies, like hiking or golf.
Long Island Railroad pensions often exceed six-figures, and the railroad will have to provide evidence of that any claim was fraudulent in order to cancel the benefits. For this reason, and the fact that it is unexpected that many employees will voluntarily come forward to admit false claims.
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