NY rail workers in disability scam can get amnesty

May 22, 2012 - 6:35 PM

NEW YORK (AP) — Railroad retirees who faked disability claims in order to get more lucrative pensions from the country's second-largest commuter rail system would avoid prosecution and be able to keep some benefits if they admit wrongdoing, federal officials said Tuesday.

In announcing the arrest of an additional 10 people in the months-long probe, federal officials also said they are offering an amnesty program for others to come forward. In exchange for admitting they made false or misleading statements to get more money from disability claims, former Long Island Rail Road workers would be able to keep their pension benefits and won't be prosecuted.

Those arrested or under investigation are ineligible for the deal.

Nine of the 10 retirees appeared in federal court in New York on Tuesday; one was arrested in Florida and appeared in court in that state. All 10 pleaded not guilty. The charges included conspiracy to commit health care fraud.

The round-up came five months after an initial batch of 11 arrests targeted railroad workers who retired legitimately from the railroad, then filed disability claims due to supposed on-the-job injuries, only to be spotted later playing golf and tennis, working out, and even riding in a 400-mile bike race. Two doctors were charged with fabricating or exaggerating medical assessments to bolster bogus claims. Prosecutors said they made millions in the scam.

The U.S. Railroad Retirement Board and the LIRR are separate organizations, and workers received disability payments from the former and pensions from the latter. While fewer than two dozen people have been arrested so far, authorities have said they suspect that hundreds of other workers pulled similar stunts, inflating future costs for the retirement board by an estimated $1 billion.

Under the amnesty program, workers who respond by July 6 give up the right to all future disability benefits. Workers who respond by Aug. 10 would also have to give back half the money they received under the phony circumstances. LIRR president Helena Williams said the program was an important opportunity for anyone else who has been dishonest.

"We urge those involved to carefully consider this offer. These federal pension benefits ... must be reserved for those who are truly disabled," she said in a statement.

Those who don't come forward, or who federal authorities determine engaged in fraud, will face criminal prosecution, according to Preet Bharara, the U.S. Attorney for the Southern District of New York.

Agents began investigating after The New York Times wrote in 2008 about the suspiciously high rate of disability pensions being awarded to middle-aged LIRR retirees. Under contract, workers can retire at the relatively young age of 50 if they've been employed by LIRR 20 years.

An investigative arm of Congress later reported that the federal Railroad Retirement Board had approved nearly all LIRR disability applications, despite evidence that something was amiss.

LIRR serves the length of Long Island and has 81 million riders a year, second-highest to the Metro-North system with 82 million, which serves New York City and suburbs to the north.

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Associated Press Writers Tom Hays and David B. Caruso in New York City and Frank Eltman in Garden City, N.Y., contributed to this report.