Congress probes railroad retirement system at risk of being defrauded, as several LIRR workers did

Congress is investigating whether a federal retirement system for railroad workers is "still at risk of being defrauded," as it was by several former LIRR workers, a federal document shows.

In a letter to U.S. Railroad Retirement Board chairman Michael Schwartz written on March 6, the Congressional Committee on Oversight and Government Reform -- the principal investigative committee in the House of Representatives -- acknowledged that the probe is underway.

The committee "is investigating whether the Railroad Retirement Board (RRB) occupational disability program is still at risk of being defrauded," the letter states.

The investigation is in response to concerns raised by Railroad Retirement Board Inspector General Martin Dickman in a February 2014 letter to Congress, the letter states. Dickman noted in the letter that the board's approval rate for occupational disability applications filed by Long Island Rail Road retirees remained high, at 96 percent, despite measures adopted by the board in recent years to curb abuses, including intensified medical screening for former LIRR workers.

"Dickman recommended that, unless the RRB implemented significant changes quickly, the occupational disability program be terminated or severely cut back," the committee wrote in its letter. "In response to Dickman's . . . letter, the committee initiated a review of the occupational disability program."

In a statement, RRB spokesman Mike Freeman declined to comment on the investigation other than to say the agency "will be responding to the committee's request for information as soon as possible."

Although federal prosecutors have convicted 33 defendants, including 29 former LIRR workers, in a massive fraud case that concluded last year relating to bogus disability claims, Dickman has said giant holes in the retirement system, including low standards for what qualifies as a disability, have kept it ripe for abuse.

"They have made incremental changes. But, in our mind, it's just a veneer," said Dickman, adding that he is pleased that Congress is investigating the system. "Hopefully, something will change."

The congressional committee's letter to the retirement board focused largely on concerns that "documents relevant to the committee's investigation," and requested months ago by investigators, "may have been stored in non-official e-mail accounts and encrypted devices off the RRB's network."

The committee directed the board to come forward with any relevant documents transmitted over private emails.

Dickman said he did not expect the private emails to uncover any acts of fraud, but said the practice "doesn't pass the smell test."

In a statement, LIRR spokesman Salvatore Arena noted that the railroad has no say in the approval of federal disability benefits, "which we believe should only go to retirees who are truly disabled."

"We have made this clear to our employees and the recent prosecutions clearly show that there is a price to be paid for lying and breaking the law," Arena said.

By Alfonso A. Castillo

alfonso.castillo@newsday.com@alfonsoreports

Alfonso Castillo has been reporting for Newsday since 1999 and covering the transportation beat since 2008. He grew up in the Bronx and Queens and now lives in Valley Stream with his wife and two sons.