The Long Island Rail Road disability fraud scandal says much about the greed of a large group of government employees and an outrageous failure of government oversight — and what good investigative reporting can do.
Some 600 LIRR retirees face loss of their disability benefits after the U.S. Railroad Retirement Board finally decided last month to halt their payments. That followed repeated requests by the board’s inspector general for it to do so based on the disability claims being bogus. The LIRR last month then said it would seek to revoke the pensions of these 600.
A “massive and brazen fraud” is how the scheme was described by the prosecution at a trial that’s been underway in recent weeks in Manhattan of a doctor charged with helping facilitate it, a former LIRR union president who acted as a consultant to LIRR personnel seeking to get the disability payments, and the former Long Island district manager of the U.S. Railroad Retirement Board. Earlier, some 25 ex-LIRR employees pleaded guilty to criminal charges, along with a second doctor who was sentenced to eight years in jail.
When the scandal first broke five years ago, Congressman Steve Israel of Huntington said: “We hear a lot about waste, fraud and abuse in government — this is the Trifecta.”
He was commenting at an October 2008 hearing chaired by then New York Attorney General Andrew Cuomo. Now governor, Mr. Cuomo noted at it that 90 percent of retiring LIRR employees had since 2000 filed for disability benefits — and 97 percent were approved for them by the U.S. Railroad Retirement Board. He said a “cottage industry” had sprung up for LIRR workers featuring consultants and amenable doctors to pull off a “classic scam on the taxpayer.”
The hearing followed a Page One investigative article by four The New York Times reporters which appeared a month earlier. Headlined “A Disability Epidemic Among a Railroad’s Retirees,” it began: “To understand what it’s like to work on the railroad — the Long Island Rail Road — a good place to start is the Sunken Meadow golf course.” It is there, related the story, where it’s “not uncommon” to find throngs of “retired LIRR employees…golfing.” They are “considered disabled” and “get a pension and tens of thousands of dollars in annual disability payments…Virtually every [LIRR] career employee…applies for and gets disability payments soon after retirement, a computer analysis of federal records by The New York Times has found.” This totaled nearly 2,000 LIRR personnel since 2000, reported The Times. A wide variety of LIRR employees — from engineers to white-collar managers — were involved.
It was a solid piece of investigative reporting — and as good muckraking is aimed at doing, caused action. The LIRR is owned by the state and Mr. Cuomo, as state attorney general, jumped into the situation as did the inspector general of the U.S. Railroad Retirement Board. Still, why weren’t state and federal governments involved far earlier considering that the scheme involved so many LIRR personnel and so much money: $250 million in federal disability benefits paid out between 2000 and 2008?
Highly disturbing testimony came at the hearing from Kim Porcelain who had been the LIRR’s comptroller from 2001 to earlier that year. She testified that when she began in the position she picked up on the overwhelming percentage of LIRR employees applying for disability as they filed for retirement and how virtually all of them were getting approved for disability. She testified that she “raised the issue” with the hierarchy of the LIRR, the inspector general of the LIRR’s parent agency, the Metropolitan Transportation Authority, and also the U.S. Railroad Retirement Board. She continued pressing, she went on, but got nowhere.
Why wasn’t anything done when Ms. Porcelain blew the whistle? And although The Times’ expose resulted in action, what about the sweeping changes clearly needed?
The smell still emanates. Lawrence Downes, a member of The Times editorial board, in a piece appearing on the editorial page of the newspaper last month, noted that the U.S. Railroad Retirement Board “has only now decided to cut off payments to about 600 of the dubiously disabled” after memos from its inspector general “imploring it” to do that. And “months after the doctor who signed off on their diagnoses, Peter Ajemian, pleaded guilty to fraud in federal court. The board also halted benefits to 229 of those retirees a few months ago, but almost immediately reinstated the 214 who appealed.”
“It’s infuriating,” stated Mr. Downes.
It sure is.