Charges Filed in 'Massive' Disability Pension Fraud Case

Eleven people, including two doctors and seven Long Island Railroad retirees, are charged in a scheme in which hundreds of LIRR employees falsely declared themselves disabled so they could retire early and claim a disability annuity, authorities said.

Federal authorities on Oct. 27 announced a "massive fraud scheme" involving disability pensions collected by Long Island Railroad employees since 1998. Eleven people, including two doctors and seven Long Island Railroad retirees, are charged in the scheme in which hundreds of LIRR employees allegely falsely declared themselves disabled so they could retire early and claim a disability annuity, authorities said.

Three New York-area doctors accounted for 86 percent of the LIRR disability applications filed prior to 2008, according to the news release about the case from the U.S. Attorney's Office for the Southern District of New York, headed by U.S. Attorney Preet Bharara. Claims approved via the scheme could cause the Railroad Retirement Board to pay more than $1 billion in unwarranted disability benefits, it states.

"Benefit programs like the RRB's disability pension program were designed to be a safety net for the truly disabled, not a feeding trough for the truly dishonest," Bharara said in the release. "And in these tough economic times -- with stretched budgets, rising costs, frozen wages, and unemployed people -- it is especially disheartening to think that railroad employees would tell a train of lies to pad their early retirements, and that a handful of doctors would traffic on the credibility of their profession to promote a culture of fraud. If the charges are proved, it will be yet another disheartening example of the kind of corruption we have seen all too much of lately."

RRB is a federal agency that administers benefit programs for railroad employees and their families. LIRR alone among U.S. commuter railroads allows employees to retire at age 50 if they've been employed for at least 20 years. But the LIRR pension they get at that point pays less than the full retirement pay for which they would be eligible at age 65, when they also receive an RRB pension. Claiming disability can allow them to roughly equal their base salary, according to the release.

LIRR President Helena E. Williams issued this statement after the charges were announced: "The LIRR condemns any fraudulent activity associated with federal disability pension benefits. In August 2008 when the LIRR became aware of the high rate of LIRR retiree applications, the LIRR asked the Railroad Retirement Board (RRB) IG and the MTA IG to investigate. The LIRR has cooperated with the U.S. Attorney's Office, the New York State Attorney General's Office, the MTA IG's Office and the RRB IG's office in their investigations of fraudulent disability pension applications. We support their efforts to root out fraud. This important benefit should be reserved only for those disabled members of the railroad community who truly deserve it. Federal disability benefits are funded by railroad employer and employee payroll taxes across the United States. We hope that today's actions by the U.S. Attorney will send a strong message to those who seek to defraud this important federal program."

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