Right, Dr. Peter Ajemian leaves federal court after his sentencing....

Right, Dr. Peter Ajemian leaves federal court after his sentencing. Ajemian was convicted for his role in a massive pension fraud scheme among LIRR workers. (May 24, 2013) Credit: Chris Ware, John Riley

The United States Railroad Retirement Board will cut the disability benefits of close to 600 Long Island Rail Road retirees following a lengthy federal investigation of widespread fraud in the LIRR that has led to numerous prosecutions and convictions of workers and physicians, the agency's inspector general confirmed Monday night.

The cut applies to workers examined by Dr. Peter Ajemian, who in May was sentenced by a federal judge to 8 years in prison, said Martin Dickman, the agency's inspector general.

Dickman, who made the suggestion to the board, said the retirees can reapply for benefits.

"If they have some type of real disability, they can go to a doctor that has some integrity and then the board will review that," he said.

Dickman said he plans to recommend the same cut for hundreds of workers examined by another doctor, Peter Lesniewski, if he pleads guilty or is found guilty after a trial, set to start July 15.

The agency made the ruling Thursday at a brief meeting inside its Chicago headquarters, Dickman said.

In a statement released early Tuesday, MTA officials said the agency "believes that federal disability benefits should be reserved for those who are truly disabled and we have moved aggressively against those retirees who have pled guilty by seeking reductions in their LIRR pension benefits."

The MTA added that "six LIRR retirees have agreed to 15 percent reductions in their LIRR pensions and we are in negotiations with a number of others," which the MTA estimates will save taxpayers $1.12 million over the retirees' lifetime.

The New York Times, which first reported the story, said most retirees will continue to collect their LIRR pensions, which are not part of the disability plan. The disability payments have cost the agency $2 million a month, according to the Times.

Oversight concerns

Over the years, critics have put the board on the defensive for its oversight of disability payments.

Most recently, in January, the inspector general found that disability examiners for the Railroad Retirement Board granted payments to LIRR workers without checking key job-duty information.

For example, LIRR did not submit job information forms for nine workers who nonetheless were approved for disability annuities, the audit said.

"These nine unverified annuities represent an estimated $3.8 million in financial risk to the agency," according to the report.

"The financial risks to the agency would be significantly higher if we considered all railroad employers that did not return Job Information Forms."

The audit also noted that the agency's policies and procedures were not strong enough in requiring the railroad employer to verify application information from workers before approving disability payments.

Ajemian, 64, of Garden City and formerly of Syosset, pleaded guilty in January to conspiracy. In the sentencing, the judge scolded Ajemian for using his medical training as part of the fraud and criminality in connection with the disability scandal.

He was described by prosecutors as the "linchpin" of a decadelong scheme to falsely certify hundreds of able-bodied LIRR retirees as unable to work so they could collect disability payments from the federal Railroad Retirement Board.

Could have cost $1 billion

Left unchecked, the scheme would have allegedly cost $1 billion, officials said.

Ajemian was accused of being the most prolific of three physicians prosecutors say were "doctors for sale," who ran disability mills for LIRR workers planning to retire.

He certified 734 retirees as disabled -- 94 percent of those he saw -- the judge said, earning $2.5 million for himself, while his patients got more than $90 million for disabilities but continued to play sports and engage in physical labor after retiring.

Manhattan federal prosecutors revealed in a May court filing that they compiled more than 800 "potential" unindicted co-conspirators in the scandal.

A copy of the list of 830 names, obtained by Newsday, indicates that the government in January described them as "unidentified co-conspirators referred to in the indictment."

The government told the defense that its trial theory was that all of Ajemian's patients were co-conspirators because Ajemian was known for approving phony disabilities.

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