Hundreds of Long Island Rail Road employees may have scammed their way to large pensions in what prosecutors claim could amount to a $1 billion scheme, authorities said Thursday.
Eleven people are facing federal charges linked to an investigation of decade-long fraud in the pension system of the nation's largest commuter rail road.
The complaint filed in Manhattan court claims former LIRR workers filed for disability before retirement so they would receive extra compensation after retirement. The resulting sum, according to prosecutors, was often more than these workers made while employed.
Those charged include two orthopedists a former union official and two office managers.
Three doctors are alleged to be involved in the scheme, one has recently died, and all are said to have reaped millions in under the table hand outs from patients and insurance companies.
The complaint filed noted that the doctors often prescribed unnecessary medial procedures, like X-rays and physical therapy in order to "pad the patients' medical files."
US Attorney Preet Bharara alleged the scheme generated $300 million in payouts so far. He gave the example of one retiree who claimed to suffer "disabling pain" when walking, and struggling to climb stairs.
"But after securing a disability pension, as we allege, she was surveilled at a gym for two hours, climbing on an elliptical trainer, and taking a step aerobics class," he said.
The FBI said that although only a few people are named in the complaint, the agency suspects many workers took advantage of the program by seeking "compensation beyond retirement for a disability that did not exist."
Investigator Diego Rodriguez called the pension scheme a "culture of sorts among the LIRR workers." He said the doctors were "brazen" in their complicity.
The investigation is ongoing.
LIRR President Helena Williams has said the federal agency acted as a rubber stamp without consulting the railroad.
In 2009, a Congressional investigation found that the system approved almost all claims filed by retired workers — at a rate much higher than other commuter railroads.
The LIRR is the nation's largest commuter railroad, and it carries about 265,000 daily riders.
The alleged abuse was first exposed by the New York Times in 2008.
With reporting by Arun Venugopal and the Associated Press