Federal prosecutors in Manhattan plan to indict 10 more Long Island Rail Road retirees for disability fraud this month and say many more are still under investigation for filing phony claims.
"This investigation is ongoing . . . very active," prosecutor Danya Perry said at a hearing in federal court in Manhattan on Friday. "There is a huge number of additional defendants we are investigating."
Two Long Island doctors, seven former LIRR workers and two so-called "facilitators" were charged in October with being part of a massive scheme to collect on phony disability claims that could have cost the federal Railroad Retirement Board up to $1 billion.
When the original group of 11 was indicted, the FBI warned that many more patients were under scrutiny, based on findings that the two doctors had qualified more than 90 percent of their LIRR patients and together vouched for more than 1,000 disabilities.
Perry said 10 more defendants will be named the week of May 14 in a new indictment, which also will charge existing defendants with violations of additional statutes and seek forfeiture of phony disability payments. They are currently charged with conspiracy, mail fraud and health care fraud.
U.S. District Judge Victor Marrero set a tentative trial date of February 2013 but said that, unless there are guilty pleas, he may have to divide the group for separate trials.
Some defense lawyers complained that adding defendants months after the original indictment and pushing the trial into 2013 was unfair because it would make the case unwieldy and more expensive to try, imply guilt through sheer numbers and delay their clients' chance at vindication.
Steven Scaring, the lawyer for Steven Gagliano of North Babylon, a former LIRR signal operator accused of riding in a 400-mile bike race after getting a disability annuity, said his client was a person of "limited means."
"It's very difficult for him, to allow the case to just drag on," Scaring told Marrero.
Joseph Ryan, the lawyer for Joseph Rutigliano of Holtsville, a former conductor who claimed a disability for crippling back pain and then was videotaped playing golf, said prosecutors are trying to coerce guilty pleas by making the case too costly to take to trial.
"They're just going to keep piling it on until no defendant can afford to defend this case," Ryan said.
In one of the key legal issues in the case, Ryan and other defense lawyers say prosecutors are trying to use statistical evidence of a "pattern" of abuse in the railroad-worker disability system against individuals who experienced genuine pain by prosecuting doctors and disability recipients together.
Marrero has not yet ruled on the admissibility of the statistical evidence or on requests to split the case up.
In a statement, LIRR spokesman Sam Zambuto said the railroad "condemns any fraudulent activity associated with federal disability pension benefits." He said the LIRR called on authorities to investigate in 2008 after noting the high rate of disability applications by retirees."We support their efforts to root out fraud," Zambuto said. "This important benefit should be reserved only for those disabled members of the railroad community who truly deserve it."
With Alfonso Castillo