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Flaws Persist in L.I.R.R.’s Disability Claims, a Report Finds

By Walt Bogdanich | The New York Times | February 21, 2014

A federal watchdog has concluded that the method of granting occupational disability payments to former employees of the Long Island Rail Road is still so flawed that roughly 96 percent of those who apply receive it, roughly the same approval rate as before a vast cheating scandal was first exposed more than five years ago.

Citing his legal obligation to report “particularly serious or flagrant problems,” Martin J. Dickman, the inspector general for the United States Railroad Retirement Board, wrote to the board on Feb. 10, saying he would recommend that the occupational disability program be terminated or severely cut back if significant changes were not made quickly.

The disability fraud at the railroad was revealed in 2008 by The New York Times, which found that virtually every career employee at the railroad was collecting disability payments after retiring early. By claiming disability, the workers were also allowed to play golf for free on state-owned courses. At the time, the railroad’s occupational disability rate was three to four times that of the average railroad.

Over all, 33 people have been criminally charged; 28 pleaded guilty and five more were convicted in Manhattan federal court. In addition, 44 former employees with the railroad avoided prosecution by admitting to their role in the fraud and agreed to the termination of their benefits. So far, federal authorities have obtained about $400 million in forfeitures and restitutions.

Under federal law, the inspector general’s finding must be forwarded to Congress, along with the retirement board’s response. In his separate letter to Congress, the chairman of the board, Michael S. Schwartz, disputed Mr. Dickman’s findings, saying the approvals of disability claims were based on “enhanced and modified” procedures instituted after extensive communications with the inspector general.

Last year, after one doctor was convicted and another pleaded guilty for taking part in the fraud, the inspector general recommended the immediate termination of benefits for more than 700 former workers whose applications had been approved by the two physicians. The board initially balked, but ultimately agreed.

Eventually almost 500 of those who were ejected from the program refiled disability applications under the retirement board’s new procedures.

With the board in the process of evaluating these new applications, the inspector general said he believed it was his obligation to alert Congress that the revised review procedures remained inadequate. “I find it inconceivable and unacceptable that the R.R.B. plans on utilizing the same division disability claims examiner structure which had ineptly adjudicated applications throughout the duration of the L.I.R.R. fraud scheme,” he wrote.

The board, based in Chicago, is made up of three presidential appointees. Mr. Schwartz said the new applications were being reviewed on the basis of new and current medical evidence. In appropriate cases, medical specialists would review the applicants in conjunction with examiners trained “in fraud awareness.”

Salvatore Arena, a spokesman for the Metropolitan Transportation Authority, issued a statement on Thursday saying that the Long Island Rail Road had no involvement in approving the disability applications.

“We share the R.R.B. inspector general’s outrage over the continued mismanagement of the program,” the statement said. “Since this issue surfaced, the L.I.R.R. has fully cooperated with federal and local authorities into the investigation of those who have abused the system.”

According to the railroad, between 2010 and 2012 there was a 38 percent reduction in the number of retirees who applied for occupational disabilities through the federal retirement board.

One of the workers featured in The Times’s investigation was a former union official who, according to federal prosecutors, helped hundreds of other railroad workers cheat the disability program out of more than $80 million. In December, that person, Joseph Rutigliano, was sentenced in Manhattan federal court to eight years in prison.

Mr. Rutigliano falsely claimed disabilities that, according to prosecutors, “made it hard for him to sit, stand, walk, dress himself, bathe himself or hold a pen for any length of time.”

As a train conductor, his job was to walk the trains and collect tickets from passengers. He eventually collected more than $400,000 in disability payments while playing hundreds of hours of year-round golf in New York and Florida, according to federal prosecutors.

Correction: February 25, 2014 
An article on Saturday about a federal inspector general’s report of continuing problems with disability claims at the Long Island Rail Road misstated his threat to recommend ending or severely cutting the disability program. The inspector general, Martin J. Dickman, was referring to the entire program run by the federal Railroad Retirement Board, not just to claims from the Long Island Rail Road. The article also rendered incorrectly the rail line’s name as the Long Island Railroad.

Read the full article on the New York Times.