Prosecutors: Long Island Railroad Pension Scam Could Total $1 Billion

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LIRR train (photo by Adam E. Moreira via Wikimedia Commons)

(New York, NY -- Stephen Nessen, WNYC) Eleven people are facing federal charges linked to an investigation of fraud in the Long Island Rail Road pension system in a scam prosecutors say could total $1 billion.

The LIRR is the nation's largest commuter railroad, with some 265,000 daily riders.

The complaint filed in Manhattan court claims an unusually high number of 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."

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.

The disability pensions were approved by the Railroad Retirement Board, which is not part of the LIRR.

LIRR President Helena Williams said in a statement:

“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.”

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.

A 2008 investigation by the New York Times found almost railroad employees were collecting disability pensions.


With the Associated Press