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Investigators busted 11 LIRR workers Thursday for bilking the railroad and taxpayers out of a staggering $1 billion by faking disabilities. Jonathan Dienst reports.
Eleven people, including two doctors and a former union official, face federal corruption charges in a long-running probe into an alleged fraud of the Long Island Rail Road's pension system that may have cost taxpayers hundreds of millions of dollars, authorities said Thursday.
Federal and state investigators made the sweeping arrests across Long Island Thursday morning.
The 11 defendants include orthopedists, consultants, pension administrators and LIRR retirees.
For nearly three years, the FBI, the New York Attorney General’s office and the MTA's Inspector General have been looking into how and why a disability pension was awarded to nearly every LIRR employee who requested one.
Federal search warrants had been executed beginning in 2008 at the Westbury offices of the Railroad Retirement Board.
A study by the General Accounting Office last year showed that LIRR workers received disability pensions at a rate 12 times higher than workers at any other railroad. Other studies showed that for years, more than 90 percent of LIRR workers who requested a disability received one.
In a system that some LIRR employees jokingly dubbed "disability by appointment," employees were allowed to choose their own doctors when seeking a disability pension and it appears many workers sought out a specific few doctors for medical exams.
Among those charged today is Peter Ajemian, an orthopedist from Rockville Centre. He is accused of helping more than 700 LIRR retirees get disability benefits from 1998 to 2008, according to the federal criminal complaint.
His office manager, Maria Rusin, is also charged in connection with the investigation.
Peter Lesniewski, another orthopedist, is accused of helping more than 200 LIRR employees obtain benefits.
Messages left with the offices of Ajemian and Lesniewski were not immediately returned.
Also charged were former Union President Joseph Rutigliano and Marie Baran, who worked as consultants to help LIRR workers "game" the system, officials said. They were paid by LIRR workers for the service, prosecutors said.
LIRR workers Gregory Noone, Regina Walsh, Sharon Falloon, Gary Satin, Steven Gagliano and Richard Ehrlinger are accused of lying to get disability benefits.
The FBI said many of the "disabled" LIRR workers were regularly seen lifting weights at gym classes, playing tennis and golf or shoveling snow.
In the year prior to claiming he was disabled, investigators said Rutigliano worked 570 hours of overtime and did not call in once for a sick day, receiving $45,340 extra in buyouts of his sick and vacation time.
The federal complaint said Noone, 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 charged who said she suffered neck, shoulder and hand pain from computer work and couldn't stand more than five minutes without leg pain 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.
Officials said 86 percent of all LIRR disability cases went through doctors Ajemian, Lesniewski and a third doctor, who has since passed away. The doctors are accused of conducting unnecessary tests and grossly exaggerating conditions.
"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.
Disability status adds about $36,000 on average to retirees' pensions each year, according to the LIRR, which amounts to millions of additional costs to taxpayers annually.
Many of the workers were still doing their jobs when doctors determined they were too sick or disabled to work. The doctors were often paid $1,200 in addition to thousands billed to insurance companies for the diagnosis.
Prosecutors said Ajemian made more than $2 million. His patients have already collected $90 million in disability benefits and expect to get $210 million more.
Lesniewski made more than $750,000. Disability payments to his patients have already totaled more than $31 million and the patients stand to receive $64 million more.
The federal Railroad Retirement Board administers the disability program in addition to a regular pension program that has an age-65 retirement.
The LIRR offers yet a third pension for workers who can start collecting benefits at age 50.
Some workers charged claimed disability so they could collect both the LIRR and a RRB disability pension starting at age 50, prosecutors said.
LIRR President Helena Williams has said a federal agency acted as a rubber stamp without consulting the railroad.
To curb abuse, the LIRR has said it would establish a disability watchdog, mandate worker ethics training and set up a fraud hotline.
The railroad also has said it wants federal legislation to mandate independent medical reviews of all disability applications.