Long Island Railroad Workers Scam $1 Billion in Disability Benefits
{{#rendered}} {{/rendered}}This week, eleven people have been accused of defrauding the Long Island Railroad pension fund to the tune of $1 billion. I guess Long Island Rail Road workers don't have the most dangerous job in the world after all.
You could be forgiven for thinking that they do, though. After all, LIRR workers applied for occupational disability benefits at 12 times the rate of workers from other commuter railroads.
In fact, a February 2010 Government Accountability Office (GAO) report found:
{{#rendered}} {{/rendered}}...that no other rail employers in [GAO’s] analysis had the consistently high rates of occupational disability awards that existed at LIRR from calendar years 2004 to 2007, the most current data available at the time of [GAO’s] review."
GAO found that in 2008 LIRR workers received twice as many benefits as workers from seven other commuter railroads -- combined.
If this comes as a shock to anyone, it shouldn't.
{{#rendered}} {{/rendered}}In 2008, The New York Times reported that in one year as many as 97 percent of workers applied for and received disability payments shortly after retiring. According to the Times, it was not just:
...engineers, conductors or track workers seeking disability payments. Dozens of retired white-collar managers are doing it as well, including the former deputy general counsel, employment manager, claims manager and director of government and community affairs.
For nearly every LIRR worker -- including desk jockeys -- retiring on disability means one of two things:
{{#rendered}} {{/rendered}}1) The LIRR is significantly lacking in safety standards or...
2) These workers are playing the system and taking the railroad’s disability system for a very expensive ride.
LIRR has recently won awards for worker safety, so that mystery is solved. Safety standards seem to be just fine.
{{#rendered}} {{/rendered}}That leaves us with the second option on this list.
This week, as if there were any doubt about what happened here, the news came that eleven people, including two orthopedists and a former union official, are facing charges of defrauding the pension system of the LIRR for a cool billion.
Again, it should come as no surprise.
{{#rendered}} {{/rendered}}Way back in 2008, The Times noted that:
Railroad officials say that as far as they know, most of the disabled workers were able-bodied until their early retirement, then only then filed papers seeking occupational disability payments.
'How is it that somebody is occupationally disabled the day after he retires when he wasn’t occupationally disabled the day before he retired?' asked Gary Dellaverson, chief financial officer for the Metropolitan Transportation Authority, the railroad’s parent.
{{#rendered}} {{/rendered}}Good question.
According to NBC New York, the process included what "some LIRR employees jokingly dubbed 'disability by appointment,' employees were allowed to choose their own doctors when seeking a disability pension and it appears many workers sought out a specific few doctors for medical exams." Doctors who were no doubt sympathetic to their cause.
And then there are the union bosses.
{{#rendered}} {{/rendered}}MSNBC reports that:
"Former union president Joseph Rutigliano and Marie Baran, who were also charged, worked as consultants to help workers "game" the system, officials told NBC New York.
LIRR workers Gregory Noone, Regina Walsh, Sharon Falloon, Gary Satin, Steven Gagliano and Richard Ehrlinger are all now accused of lying to get disability benefits.
{{#rendered}} {{/rendered}}Officials said 86 percent of all LIRR disability cases went through doctors Ajemian, Lesniewski and a third doctor who has since passed away.
The doctors are accused of conducting unnecessary tests and grossly exaggerating conditions. Many of the workers were still doing their jobs when the disability findings that they were too sick or disabled to work were offered.
The doctors were often paid $1,200 in addition to thousands billed to insurance companies. Prosecutors said Lesniewski made more than $750,000 while disability payments to his patients have already totaled more than $31 million and could receive $64 million more. Dr. Ajemian made over $2 million and his patients have already collected $90 million with expectations they will get $210 million more.
{{#rendered}} {{/rendered}}Gregory Noone collects an annual combined retirement and disability pension of $105,000 every year. In 2008, investigators said the disabled Noone signed in to play golf at an area club on 140 different days."
Union monopolies on labor -- like all artificial monopolies -- are perfect incubators of corruption and sloth. In this outrageous case, it appears that unscrupulous doctors colluded with loathsome union officials to help their members rob the railroad’s disability system (aka their fellow workers) of $1 billion.
Matt Patterson is the Warren Brookes fellow at the Competitive Enterprise Institute (CEI) and senior editor at the Capital Research Center. Vernuccio is Labor Policy Counsel at CEI.