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LIRR will try to revoke 600 retiree pensions

The Long Island Rail Road will try to

The Long Island Rail Road will try to revoke the pensions of 600 retirees whose federal disability benefits were cut last week because of suspicions about fraud, LIRR officials said. (May 6, 2011) Credit: Howard Schnapp

The Long Island Rail Road will try to revoke the pensions of 600 retirees whose federal disability benefits were cut last week because of suspicions about fraud, LIRR officials said Tuesday.

The U.S. Railroad Retirement Board voted to end disability payments for the former workers. They were all examined by Dr. Peter Ajemian, who admitted to signing hundreds of bogus disability claims and was sentenced in May to 8 years in prison.

The retirement board acted on the recommendation of its inspector general, Martin Dickman, who wrote in a memo that the application of any retiree who saw Ajemian was "tainted" and that the benefits "must be terminated without exception."

LIRR officials said Tuesday they would expand their net to also try to revoke the pensions of the 600 Ajemian-examined retirees, even though they have not been criminally charged.

"The LIRR believes that federal disability benefits should be reserved for those who are truly disabled and we have moved aggressively against those retirees who have pleaded guilty by seeking reductions in their LIRR pension benefits," LIRR officials said in a statement.

Trying to revoke those pensions, officials acknowledged, would be challenging because, without convictions, there would be no record of the retirees admitting to fraud while working for the railroad, as there is with those who have pleaded guilty.

The 600 retirees examined by Ajemian, an orthopedist who had a practice in Rockville Centre, are receiving about $2 million a month in federal disability benefits, according to the board. They will have the opportunity to reapply for disability benefits "based upon current medical benefits," according to the decision.

The LIRR had already vowed to try to take away the pensions of any retiree convicted of fraud in connection with a yearslong federal investigation into bogus disability claims.

The railroad's pensions are funded by its revenue, including fares, and are separate from federal Railroad Retirement Board funds. Workers collect the retirement benefits instead of Social Security, and pay into the fund. In 2012, the LIRR paid $100 million into the federal fund, according to railroad figures.

To revoke the pensions of those in the Ajemian case, the railroad would have to prove before an LIRR pension board that the retirees committed "fraudulent activity" while being active employees.

Edward Yule, a Northport attorney who frequently represents LIRR workers in lawsuits against the railroad, said the agency had no authority to go after workers' pensions for acts they committed outside of their job duties.

"It's a threat," Yule said. "It's not going to work."

The LIRR has already reached agreements with six indicted retirees to give up 15 percent of their pensions. In exchange, the agency will not pursue revoking the full pension, and will submit a letter detailing the retirees' cooperation to the federal judge considering their sentences.

The LIRR estimates that pension forfeiture by those six retirees will save the agency $1.12 million.

William Arnone, chairman of the National Academy of Social Insurance -- a nonprofit Washington, D.C., organization studying insurance issues, said it's rare for public employees to willingly negotiate giving up a piece of their pensions.

"It is something I haven't seen," said Arnone, of Port Washington.

He said the Railroad Retirement disability programs "have been strained to the limits," and are struggling even to pay those who are legally eligible for benefits.

The board said it will send notices to the 600 affected retirees early this month. They would also lose their Medicare benefits and annuities for their spouses.

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