Bloomberg News

Eleven Charged in $1 Billion New York Railway Disability Probe

October 27, 2011

Oct. 27 (Bloomberg) -- Eleven people, including two doctors and a former union president, were charged by the U.S. with taking part in a $1 billion scheme to falsely claim disability benefits for retired New York commuter railway workers.

The doctors fraudulently recommended that hundreds of Long Island Rail Road retirees get payments from the U.S. Railroad Retirement Board, according to a complaint unsealed today in Manhattan federal court. The scheme would have resulted in the payment of more than $1 billion in unnecessary benefits, the U.S. said.

“LIRR employees who were eligible to retire as early as age 50 with an LIRR pension, sought -- through this widespread fraud -- to supplement their LIRR pension with a separate RRB disability annuity,” Adam Suits, a special agent for the board’s Office of the Inspector General, said in the Oct. 26 complaint.

Former railroad employees who claimed to be unable to work because they couldn’t stand, bend or grip objects without pain, among other symptoms, were seen playing golf, shoveling snow and bike riding, according to the complaint. The two doctors charged allegedly helped hundreds of people collect bogus disability benefits.

The charges are the result of a long-term fraud probe led by the Federal Bureau of Investigation, which found that more than $300 million in undeserved benefits were claimed, according to person familiar with the matter. The probe was a joint investigation by the FBI, Metropolitan Transit Authority and the office of the Inspector General of the Railroad Retirement Board, according to the person, who declined to be identified because details of the probe weren’t yet public.

The case is U.S. v. Ajemian, 11-Mag.-2748, U.S. District Court, Southern District of New York (Manhattan).

--Editors: Andrew Dunn, Glenn Holdcraft

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net; Bob Van Voris in Manhattan federal court at rvanvoris@bloomberg.net. To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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