Eleven people, including two orthopedists and a former union official, face charges in an investigation of fraud in the pension system used by employees of the nation's largest commuter railroad.
Janice Fedarcyk, the head of New York's FBI office, called it a "game where every retiree was a winner." U.S. Attorney Preet Bharara said the disability pension program was not designed to be "a feeding trough for the truly dishonest," but authorities say that's what happened.
Hundreds of LIRR employees falsely declared themselves disabled to collect more pension money from the ages of 50 to 65, when they would otherwise qualify for full benefits, the complaint said.
The federal criminal complaint said a retired engineering manager who complained of severe hand, knee, shoulder and back pain often played tennis and golf while collecting about $105,000 yearly in combined pension and disability payments.
Another former employee said she suffered neck, shoulder and hand pain from computer work and couldn't stand more than five minutes without leg pain. She was "surveilled shoveling heavy snow for approximately one and a half hours," the complaint said. She gets about $108,000 a year in combined pension and disability payments.
"The disability doctors prescribed for the LIRR employees a series of unnecessary medical tests, including at times rounds of x-rays, scans and nerve conduction tests, as well as purported treatments, including physical therapy, in order to pad the patients' medical files," the complaint said.
"The LIRR employees generally paid the doctors between approximately $800 and $1,200, often in cash, to prepare for a medical assessment and/or illness narrative for submission" to a federal board, it said. The doctors "prepared fabricated or grossly exaggerated medical assessments and/or illness narratives" to show the employees were unable to work.
The criminal complaint was written by former FBI Agent Adam M. Suits, who's now a special agent with the Office of the Inspector General for the federal Railroad Retirement Board. He estimated that "the fraudulent scheme could cause the RRB to pay unwarranted occupational disability benefits exceeding $1 billion if disbursed in full."
LIRR President Helena Williams has said the Railroad Retirement Board acted as a rubber stamp without consulting the railroad.
"The LIRR condemns any fraudulent activity associated with federal disability pension benefits," Williams said, adding that the LIRR has cooperated with authorities and supports "efforts to root out fraud."
The LIRR carries about 265,000 rides daily.
In 2009, an investigative arm of Congress found that the system approved nearly 100 percent of claims filed by retired LIRR workers - a higher rate than other commuter railroads.
A 2008 New York Times investigation prompted criminal investigations.
"During my tenure as attorney general, we investigated and, exactly three years ago today, held hearings that revealed systemic abuse of the federal railroad pension system involving LIRR workers in a practice we termed `disability by appointment,"' Gov. Andrew Cuomo said in a statement. "These arrests continue to show that we have zero tolerance for waste and fraud when it comes to pension systems."
Associated Press writer Kiley Armstrong contributed to this report.