Hearing into LIRR disability payouts

October 27, 2008 4:01:54 PM PDT
Long Island Rail Road employees routinely instructed colleagues on how to successfully file disability applications - telling them of doctors willing to cooperate for a fee - and guiding them through a process that saw virtually every applicant approved for benefits, witnesses told state and federal officials Monday. Four separate investigations are under way after it was reported last month that more than 90 percent of the railroad's retirees applied for disability payments - and nearly 98 percent were approved by an obscure federal board, allowing them to collect an average of $26,000 in benefits annually.

New York Attorney General Andrew Cuomo, who is heading one of the probes, said that since 2000, about $250 million has been paid to LIRR retirees seeking disability benefits; it is not known how many are legitimately injured. The revelations come after the LIRR has earned national awards for worker safety in recent years.

Cuomo and Long Island's five-member congressional delegation held hearings Monday on how the scandal unfolded.

"There appears to have been a cottage industry if you will, that developed to expedite the granting of disability benefits - certain labor consultants, certain doctors who specialized in the area," Cuomo said. "The question for this hearing is how did it happen?"

Cuomo's chief of staff, Steven Cohen, played a video interview with an orthopedist cooperating with the investigation, who testified that LIRR employees began planning for their disability applications while healthy and still on the job. The physician, who was not identified because the investigation is ongoing, said many of the employees seemed to approach the process as a matter of routine.

They paid him $750 and he filled out the paperwork, usually identifying injuries involving the back, hips or knees and a lot of discomfort.

"It was clear to me that these patients saw this benefit as an entitlement," the physician said. "These patients said they were counseled on when and how to apply for benefits."

On the videotape, Cohen suggested: "This was almost disability by appointment?"

"You got it," the doctor said. "Prearranged."

No one has been criminally charged in the investigation, although LIRR President Helena Williams told the panel that an employee was suspended indefinitely on Monday after it was determined that he was counseling co-workers on the disability application process at work. Williams declined to identify the employee by name or job description, also citing ongoing investigations.

Williams, who became the railroad president in 2007, has blamed much of the scandal on the actions of the federal Railroad Retirement Board, based in Chicago. She has suggested that the agency acted as a rubber-stamp and did not consult with the LIRR on disability decisions.

"A system without checks and balances all too often begs for fraud," she said. Williams said any such abuses would cheat taxpayers, because they help subsidize railroad operations, as well as commuters, who are charged between $11 and $26 for a one-way peak ticket, depending on the length of their trip.

Rep. Gary Ackerman blasted Williams and her railroad for lack of oversight, noting that one LIRR official suspected as early as 2002 that there might be a problem, yet nothing was done until recent weeks.

"This to me is poor management," Ackerman scolded Williams despite her objections. "This is just like Wall Street. There were no regulators and no enforcers. This is a local abuse problem. You gave license to this."

The New York Times, in its report last month, compared figures with the Metro-North Railroad, which has the same parent agency and runs trains to New York City's northern suburbs. Despite work forces of similar size, Metro-North had 32 cases of retiree disability from arthritis and rheumatism between 2001 through 2007. The LIRR had 753.

In one year, Metro-North had just 2 cases. The LIRR had 118, the newspaper found.

No one from the Retirement Board attended the hearing; phones at its Chicago and Long Island offices were not answered Monday. Earlier this month the board approved a series of reforms including requiring independent medical evaluations, periodic re-evaluations of workers who receive the payments, and increased supervision of the retirement board's Long Island office.

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