New York State Investigating LIRR Scamming: UPDATE: FBI Raids Federal Agency

As reported by the New York Times over the weekend and covered here, New York State has launched an investigation into the LIRR and practices that have allowed employees to claim disabilities to receive federal funds from an obscure federal agency to the tune of $250 million since 2000, in addition to padding salaries using various contract clauses to their advantage.

NYS Attorney General Andrew Cuomo was granted authority to investigate possible fraud in the case, and has already subpoenaed the LIRR.

Starting as soon as Tuesday, investigators from the attorney general’s office will meet with officials from the Metropolitan Transportation Authority and the railroad to begin sorting out how so many employees apparently took advantage of the system.

In addition, state parks officials have begun a review of the requirements and distribution of Access Passes, which give the disabled — including the railroad’s retirees who receive disability payments — free use of sports facilities in state parks, said Erin Duggan, a spokeswoman for Gov. David A. Paterson.

The subpoenas to the L.I.R.R. went out one day after Mr. Paterson granted Attorney General Andrew M. Cuomo broad powers to investigate the matter.

“This begins what will be an aggressive and expeditious investigation into troubling allegations of wrongdoing,” Mr. Cuomo said in a written statement.

Helena E. Williams, president of the railroad, has said it planned to hand over whatever was requested of it.

The investigation followed a report by The New York Times that found that virtually every career employee of the railroad applied for and received federal disability payments shortly after they retired. In many cases, the workers showed no signs of disability while they were employed, yet they claimed disability once they retired.

An obscure federal agency, the Railroad Retirement Board, reviews the claims, which have cost taxpayers hundreds of millions of dollars. The practice also ends up costing the railroad money because so many workers retire early to take advantage of the benefits. As a result, the railroad pays for early pension benefits, extra overtime costs and training new workers. Unusual contract provisions that allow the railroad’s employees to retire as early as 50 with a full pension contribute to the problem.

What this suggests is that no one at the LIRR ever bothered to notice how many of its employees suddenly came to be classified as disabled the moment they considered retirement in order to cash in.

The fact that nearly all former employees, from management on down to the conductors, took advantage of this suggests that this was a well known and open secret that considered the federal program to be nothing more than a piggy bank to raid.

It means that LIRR employees fleeced all taxpayers hundreds of millions of dollars over the years, and meant that the amount of money available to Social Security and infrastructure were reduced by the fraudulent claims.

The MTA is again calling for fare hikes and/or service cuts, which should now be cast in a different light since the MTA has completely mismanaged its budget and failed to engage in proper oversight of its own subsidiary - the LIRR. The NYS Legislature is also at fault, since they too have failed to engage in proper oversight that would have potentially uncovered the rampant featherbedding and disability scam. No one bothered to protect taxpayers, all while the MTA and LIRR were looking to taxpayers to increase their budgets, increase fares, and reduce service.

UPDATE:
The FBI and federal officials have raided the federal agency responsible for rubber stamping the LIRR employee disability payments to the tune of at least $250 million since 2000.

The raid, part of a separate federal inquiry, was led by investigators for the retirement board’s inspector general, joined by agents for the F.B.I.

And after the disclosure that dozens of the railroad retirees have been enjoying free golf on state-owned courses, state parks officials have also begun a review of who gets an Access Pass, which gives the disabled free use of sports facilities in state parks.

Martin J. Dickman, the retirement board’s inspector general in Chicago, declined to comment on the raid, except to say, “We’re investigating.”

The retirement board is run by three presidential appointees, one representing labor, one representing management and one representing consumers.

L.I.R.R. workers file for occupational disability benefits after they retire and can get them if they are unable to perform their regular railroad jobs — even though they might be capable of doing other work. Under retirement board rules, rail employees can pick the doctors who conduct their medical evaluations.

“I understand the outrage that has ensued,” Jerome F. Kever, the management member of the railroad board, said in a statement released on Tuesday. “The occupational disability program that exists today under the Railroad Retirement Act too easily permits medical conditions normally associated with aging to be adjudicated as occupationally disabling.”

Congress dropped the ball by not engaging in proper oversight - or perhaps they simply figured that no one would care that taxpayer money was being spent in this fashion.