LIRR disability pensions restored for most who reapplied after losing benefits in doctor fraud

Most Long Island Rail Road retirees who had their disability benefits terminated because they were examined by doctors later convicted of fraud have gotten their benefits back, according to federal government figures.

Ninety-one percent of all decisions by the U.S. Railroad Retirement Board on LIRR retirees who lost their benefits because they were examined by convicted doctors Peter Ajemian or Peter Lesniewski resulted in approval as of Oct. 31.

Of the 486 decisions rendered on new applications filed by 702 LIRR retirees who lost their disability benefits, 440 were approved. The board denied 33 claims.

Other cases fall into various statuses, including those filed by applicants who have died or abandoned their claims. The average LIRR disability benefit is about $33,000 a year, according to board figures.

Another 149 retirees applied for different railroad retirement benefits for which they became automatically eligible upon turning 62, board figures show.

The board ruled last year that any disability pensions based on medical evidence provided by Ajemian or Lesniewski -- both convicted of fraud for falsifying medical evidence in LIRR disability cases -- were "invalid and must be re-filed."

"None of the individuals who have reapplied for disability benefits pursuant to the board orders had been indicted, convicted, or pled guilty to fraud," Michael Freeman, attorney for the three-member railroad retirement board, said in a statement.

'Enhanced review'

As part of the reapplication process, the former patients of Ajemian and Lesniewski were "subjected to a substantially enhanced review" that included independent exams conducted by medical specialists chosen by the board and separately reviewed by another board-contracted doctor, Freeman said.

Claims examiners, who make the final determination on an application, also received extra training in detecting fraud and reviewing medical records, Freeman said.

Despite those changes, Railroad Retirement Board Inspector General Martin Dickman said the "ludicrous" rate of new approvals of patients originally examined by Ajemian and Lesniewski speaks to deep flaws in the federally regulated railroad disability system, and the ineffectiveness of measures taken in recent years to fix it.

"Nothing's really changed. It's a veneer," Dickman said. "It's really the same ailments that they had the last time. They rubber stamped them again."

William Arnone, chairman of the National Academy of Social Insurance -- a nonprofit Washington, D.C., organization studying insurance and pension issues -- said the high approval rate in the new applications filed by former patients of the convicted doctors suggests the retirees' "disabilities were bona fide," and that they only saw Ajemian and Lesniewski because of the doctors' familiarity with the railroad retirement system.

"It may have been that there was no sense that, 'These guys are crooked. Go to them.' It may have been, 'These guys are easy. Go to them,' " Arnone said. "It's a very different picture than the one that emerged originally. It sounds like there was conspiracy on one end, but not on both ends."

744 lost benefits

At Dickman's recommendation, the board last year terminated the occupational disability benefits of 744 LIRR retirees examined by the two convicted orthopedists.

None of the 29 LIRR retirees who were convicted in connection with federal prosecutors' disability fraud cases re-applied. Prosecutors said several of those convicted retirees openly participated in strenuous activities while collecting disability, including pursuing a jiujitsu black belt and becoming a volunteer firefighter.

Ajemian admitted in January 2013 that he accepted cash payments in exchange for diagnosing bogus medical conditions in hundreds of retiring LIRR workers when "these employees were not in fact disabled."

A federal jury found Lesniewski guilty of similar charges in August 2013. Both men are serving 8-year prison sentences. A spokeswoman for Preet Bharara, the U.S. attorney for the Southern District of New York, who prosecuted the two doctors, declined to comment.

Lesniewski's trial attorney, Thomas Durkin of Chicago, said the fact that most of his client's patients received similar diagnoses in their new applications "virtually proves his innocence."

"This evidence is consistent with other evidence we tried to introduce at trial that was blocked by the government," said Durkin, who is not representing Lesniewski in his appeal but said he believes the new figures could be grounds for a new trial.

The Railroad Retirement system was created in the 1930s to give railroad workers -- who do not receive Social Security benefits -- financial protections that recognized the unique dangers of their jobs.

Standards called low

Dickman said the increased scrutiny on those who reapply for LIRR disability benefits did nothing to address what he called the board's low standards for what qualifies as an occupational disability.

Dickman said common LIRR retiree diagnoses, such as spinal stenosis and herniated discs, are frequently found in people over age 50. "That doesn't mean you can't do your job," he said.

In 2008, Newsday reported that while bone and connective tissue disorders accounted for 29 percent of all disability cases filed through the Social Security Administration between 2001 and 2007, similar ailments made up about 85 percent of LIRR disabilities from the same period.

In February, Dickman wrote in a memo that even after the board attempted to increase oversight for LIRR disability applicants, in part through increased medical screening, the rate of LIRR applicants being approved for occupational disability benefits was almost 96 percent -- "essentially unchanged" from 2008, when that high rate surfaced.

Investigators have said a generous LIRR pension for workers hired before 1988 created an incentive to retire early and then claim a disability.

Although the LIRR has said it has no direct involvement in the federal disability process, the agency has taken internal steps to curb potential fraud in recent years, including more ethics training and increased communication with the retirement board.

New LIRR president Patrick Nowakowski said that any kind of fraud "disgusts" the agency.

"It's a very real cost to the MTA," Nowakowski said. "It's a cost that we need to do everything we can to try to reduce or get better control of."

Call for reforms

Dickman said although the federal prosecutions of the doctors, some LIRR retirees and others connected to disability fraud has served as a deterrent, and coincided with a drop in the number of LIRR disability applications, the U.S. Railroad Retirement Board still approves disability claims, nationally, at a rate of about 96 percent.

He has called for major reforms of the railroad retirement system, including limiting occupational disability benefits to two years, or doing away with the disability system and replacing it with an entitlement annuity for every railroad worker who applies.

"Eliminate the facade," Dickman said. "This wasn't meant to be a permanent-type situation . . . These people are never getting better."

Sen. Charles Schumer (D-N.Y.), who pushed for tighter control on LIRR disability applications, said in a statement that it is essential that, "for the integrity and fairness of the system," only retirees who meet the legal standards of disability receive benefits.

"It is also important that those who are ineligible aren't getting a free ride," Schumer added. "That is why it is critical that the RRB [retirement board] carefully review the results of these cases to make sure all legal standards are adhered to consistently."

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.