Retiring Long Island Rail Road workers were coached by a former union president and retirement board office manager on how to file disability claims, paid doctors who administered "unnecessary medical tests" and claimed benefits allowing them to earn as much income as they had pre-retirement, according to a 74-page complaint by the U.S. attorney for the Southern District.
The complaint said three doctors were primarily responsible for verifying the claims and received "millions of dollars in corrupt payment from patients and insurance companies" in the fraud.
The doctors are identified as Peter J. Ajemian, who practices in Rockville Centre, and Peter J. Lesniewski, who has practices in East Meadow and Hicksville. Lesniewski previously worked with the third doctor, who died, the complaint said. That doctor wasn't named.
The complaint alleges employees paid the doctors $800 to $1,200 to prepare "fabricated or grossly exaggerated medical assessments and / or illness narratives" for retiring LIRR employees. Those narratives and assessments recommended "a set of restrictions that if bona fide would have rendered it impossible for the LIRR employees to continue in their occupations." At one point, the complaint says, Ajemian was preparing about 15 narratives a week -- at $1,500 apiece.
Employees were coached by so-called "facilitators," the complaint says. Those facilitators were former LIRR union president Joseph Rutigliano and Railroad Retirement Board representative Marie Baran, according to the complaint.
Baran was the office manager for the Chicago-based agency's office in Westbury and, the complaint says, once told an investigator sent to interview her about the alleged fraud: "You are never going to figure it out, honey."
Railroad employees were eligible to retire as early as age 50, after serving 20 years, according to the complaint. It says the LIRR is the only commuter railroad in the nation where employees can retire so young.
Those employees were eligible for a second pension -- from the Railroad Retirement Board -- at age 65. However, the complaint says, if employees retired on disability, they qualified for the LIRR pension -- and, the RRB disability benefits -- immediately.
The complaint said the scheme dates to 1998 and a source told Newsday more than $300 million in fake benefits has already been paid.
The complaint said that, had it not been stopped, "unwarranted occupational disability benefits exceeding one billion dollars" would have been paid.
Ajemian, Lesniewski and the third doctor prescribed "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 alleges.
It says that 1,423 LIRR employees, 869 between the ages of 50 and 55, received Railroad Retirement Board disability awards between 2004 and 2008 -- compared to just 61 employees between the ages of 50 and 55 at Metro-North.
Both railroads are operated by the Metropolitan Transportation Authority.
The complaint also says that Railroad Retirement Board examiners trust the applicants to accurately describe their job requirements, and rarely, if ever, confirms those job descriptions by comparing them with third-party submissions. It says that though the Railroad Retirement Board "routinely asks the LIRR for job descriptions," it "did not follow up when the LIRR failed to respond -- which was virtually all of the time."
In anticipation of receiving their railroad pensions, the complaint says, employees "prepared disability applications that falsely claimed an inability to work," even though the employees were performing their jobs until retirement.
Complaints included arthritis, rheumatism, debilitating neck, shoulder, wrist and back injuries -- though employees were later seen doing activities like playing tennis, golf, shoveling snow or doing aerobics. One employee out on disability even went on a 400-mile bike tour of New York.
The so-called facilitators, Baran and Rutigliano, assisted those employees by "either filling out their applications themselves" or "coaching the LIRR employees to fill out their disability applications in such a way" as to "maximize the likelihood" they would receive unwarranted disability benefits.
The complaint says Baran's clients paid her at least $1,200 for her help. Rutigliano was also paid, the complaint says.
Between September 2004 and September 2008 alone, the complaint alleges, about 453 LIRR patients received Railroad Retirement Board disability payments after paying Ajemian $800 to $1,200 for a narrative. Including unnecessary medical tests, the complaint said, the average payment per patient was about $4,500.
Those patients have already received more than $90 million in disability benefits, the complaint says. The complaint says those patients were slated to receive another $210 million in future payments.
During that same time frame, the complaint said, Lesniewski processed 134 patients. Those patients have received $31 million in payments and were slated to received an additional $64 million in payments.
According to the complaint, 96.55 percent of all railroad employees who saw Ajemian were declared disabled within 720 days, while 97.5 percent of all seen by Lesniewski were declared disabled in 720 days.
Ajemian told an investigator his patients were "not totally disabled, just disabled for their jobs," according to the complaint.
"I take what they tell me . . . to be the truth," Ajemian said, according to the complaint, adding, "And I can't question their integrity."
The complaint says retired LIRR engineering manager Gregory Noone receives "at least $105,000" in combined pension and disability benefits and said Ajemian claimed medical restrictions "on bending, stooping, and reaching overhead."
Nevertheless, the complaint said, Noone played tennis several times a week and golfed 140 times on a course during a nine-month period in 2008.
Another of those arrested, Steven Gagliano, a retired LIRR signal operator, receives $76,810 in combined annual pension and disability payments for "a purported disability that he claimed rendered him unable to 'do any of the physical labor required in his job as a signalman,' " the complaint says.
Yet, according to the court documents, Gagliano "successfully completed a 400-mile bike tour in northern New York" in 2009.