Eleven Charged in Massive $1B Pension Fraud Scandal

NEW YORK – Eleven people, including a former union president and two orthopedists, were slapped with fraud charges Thursday in connection with a massive pension scam involving fake disability claims by Long Island Rail Road (LIRR) workers that cost the agency $1 billion, authorities said.

Ten of the 11 suspects -- who also include seven former LIRR workers accused of making false pension claims and a former federal railroad pension agency employee -- were busted Thursday morning by the FBI for their involvement in the long-running swindle.

In the 74-page criminal complaint, the Manhattan US Attorney's Office said workers who were "ready to retire falsely claimed to be disabled ... so that they could receive extra benefits to which they were not entitled."

The feds said the workers charged who were eligible to retire at age 50 tried to "supplement their LIRR pension with a separate ... disability annuity ... that often approximated their pre-retirement, working income."

The workers, the complaint claims, were aided by doctors who "prescribed ... a series of unnecessary medical tests ... in order to pad the patients' medical files."

The feds said the workers filed disability applications after retiring, "even though [they] were performing their jobs up until the time they retired."

In return, the doctors were paid as much as $1,200, authorities said.

Joseph Rutigliano, a former LIRR conductor and union president, served as one of the "facilitators" and helped workers fill out and file the bogus applications.

Rutigliano, who also served as a Metropolitan Transportation Authority (MTA) board member, retired in 1999 at age 52 and also applied for disability benefits, the feds said.

In the 12 months before he retired, Rutigliano worked 570 hours of overtime and never took a sick day, according to the complaint.

Authorities also said that the high rate of disability claims and payouts was a result of the LIRR allowing pensions to employees as young as 50.

A staggering 79 percent of LIRR employees over age 50 received disability benefits from 2004 to 2008, according to MTA data.

The workers arrested were so brazen that they "openly discussed" -- while sitting in a doctor's waiting room -- what they planned to do once the paperwork was approved and they retired, according to the criminal complaint.

In some cases, the feds said, the workers were "bragging about playing golf."

In 2009, the federal Government Accountability Office (GAO) found that LIRR employees applied for disability pensions at a rate 12 times higher than at other commuter railroads with nearly everyone getting approved.

Most of the LIRR claims were for "musculoskeletal impairments," including lower-back problems, while only about half of workers at other railroads reported similar ailments, according to the GAO report.