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Fewer LIRR retirees applying for federal disability, records show

An LIRR conductor checks a platform at Jamaica

An LIRR conductor checks a platform at Jamaica station as a commuter tries to board on July 8, 2014. Credit: Newsday / J. Conrad Williams Jr.

The percentage of eligible Long Island Rail Road retirees applying for federal disability benefits has dropped sharply over the past five years, LIRR statistics show.

The decline coincides with heightened vigilance by the railroad, investigators and federal prosecutors since they discovered the unusually high number of disability claims from retiring LIRR workers already covered by a lucrative pension plan.

Those eligible were workers who reached 50 and were hired before 1988. The federal Railroad Retirement Board's approval rate of disability applications has historically been high, and investigators zeroed in on it because they believed some applicants were never even properly examined by a doctor.

It worked like this: The pre-1988 employees are covered under an LIRR pension that allows them to retire at 50 with 20 years on the job. However, they cannot collect a Railroad Retirement Board age and service pension -- the equivalent of Social Security benefits for railroaders -- until they are 65. But they can start collecting RRB benefits early if deemed to qualify for disability.

Since the crackdown began, the board's inspector general contends workers retiring early are less likely to pursue a spurious disability claim.

"It's had a deterrent effect, as far as people thinking maybe, 'Hey, I don't know if they're done with their investigation or not, but I'm not going to chance it,' " said U.S. Railroad Retirement Board Inspector General Martin Dickman. "There's nothing like that to make you think for a while whether you should file anything or not."

According to the LIRR, of 38 employees covered under that plan who retired in 2014, 11 applied to the Railroad Retirement Board for occupational disability benefits, or 29 percent. That percentage is down from 2010, when 106 of 158 eligible LIRR retirees applied for the benefit, or 67 percent.

The proportion increased even higher, to 77 percent, in 2011, but has fallen each subsequent year.

Created in 1935, the railroad board is a three-member panel that administers federal retirement benefits to railroad workers. The LIRR does not have a role in considering the federal disability cases, but does track applications and approvals from former workers.

"The LIRR has remained steadfast that only retirees who are truly disabled should receive federal disability benefits," said Edward Dumas, the LIRR's vice president for market development and public affairs. "We will continue to take steps to discourage abuse of this very important federal program."

In 2008, a New York Times investigation found that more than 90 percent of LIRR retirees were receiving disability benefits. In 2011, the U.S. attorney's office charged several former LIRR workers, two doctors and a retirement board employee in a conspiracy to defraud the board, including by falsifying medical records.

Golf on disability pension

Prosecutors discovered that several ex-LIRR employees were receiving disability pensions, which average $33,000 a year, while playing golf, competing in bike races, instructing martial arts classes, and training to become firefighters. Eventually, 33 defendants were convicted, including 29 former LIRR employees.

Besides the increased vigilance, experts said other factors could contribute to the falling number of disability applications, including the possibility that some will file for disability benefits in the future or have already reached the age of 65, when they would automatically be entitled to equivalent benefits based on their age and years of service.

But former LIRR government relations official and union lawyer Edward Yule Jr. said he believes the criminal prosecutions of dozens of former LIRR workers have scared off potential applicants -- even those who are legitimately disabled.

"Ask yourself: Would you apply for knowing that you could be arrested because you've got 2 inches of snow and you wiped it off yourself? Nobody wants to live like that," said Yule, who often represents railroaders in personal-injury claims against the LIRR. "If they want you, they'll get you. . . . It has nothing to do with fraud."

The retirement board's own statistics also show a gradual drop in the number of approvals of LIRR disability claims each year since 2010. The board said it awarded disability annuities to 30 former LIRR workers in 2014, down from 114 in 2010 -- a 74 percent decline.

But despite fewer and fewer LIRR retirees applying for disability benefits, Dickman, the retirement board inspector general, believes the federal railroad retirement system remains ripe for abuse, with about 98 percent of all applications still being approved.

Reforms to fight fraud

At a House Committee on Oversight and Government Reform hearing earlier this month, Railroad Retirement Board chairman Michael Schwartz announced a number of reforms that will "better protect our system from fraud."

They include creation of a "quality assurance" division that will more closely scrutinize disability applications, mandatory fraud training for all employees, and a new requirement that all disability applicants undergo an independent medical examination.

"The Long Island experience has helped us recognize a number of shortcomings in the disability benefit program," Schwartz told committee members. "We are committed to real change."

But Dickman said the independent medical screenings will be "useless," and noted that more than 90 percent of LIRR retirees who had their disability benefits terminated because they were examined by doctors later convicted of fraud have gotten back their benefits -- after being examined by board-selected doctors.

Dickman said without a change in the board's belief that "We're here to pay," any reforms will be a "waste of money." He's recommended changes, including making occupational disability benefits temporary or doing away with the system altogether.

The U.S. Government Accountability Office, in a report this month, also found weaknesses in the federal railroad disability system, including its reliance on paper files and outdated financial information.

Rep. Mark Meadows (R-North Carolina), chairman of the House subcommittee on government relations, told Schwartz that lawmakers want to see "real progress . . . made in short order."

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