11 Charged in LIRR Disability Fraud Plot

Eleven people were charged on Thursday in an enormous fraud scheme in which hundreds of Long Island Rail Road workers falsely claimed to have disabling injuries, with some of them collecting tens of thousands of dollars in annual pensions while spending time playing golf, law enforcement officials said.

Uli Seit for The New York Times

Joseph Rutigliano, a former Long Island Rail Road conductor, playing golf in 2008. Mr. Rutigliano retired in 1999 after a year in which he worked over 500 hours of overtime and took no sick leave, according to the complaint. He then applied for and received disability benefits upon his retirement.

The fraudulent payouts in the scheme, officials estimate, could end up costing a federal pension agency more than $ 1 billion if fully disbursed.

Ten of the defendants were taken into custody early Thursday at their homes by agents from the Federal Bureau of Investigation and state investigators, officials said. They included seven former railroad workers, including a former union president; a former federal railroad pension agency employee who helped the workers file claims; a doctor; and a doctor's office manager. A second doctor is expected to surrender on Friday.

The United States attorney in Manhattan, Preet Bharara, said, "Employees, in many cases, after claiming to be too disabled to stand, sit, walk or climb steps, retired to lives of regular golf, tennis, biking and aerobics."

The charges involving the railroad come at a time when public workers' unions across the country have faced heavy criticism for negotiating pension obligations that led many government agencies to slash services and lay off teachers, police officers and other workers.

A sampling of hundreds of cases approved by two doctors showed that $ 121 million had been paid to workers whose disabilities were either fabricated or exaggerated, according to court papers, though the total was quite likely more. It was unclear if officials would try to stop the payouts, or could even legally do so, before the disbursements hit $ 1 billion.

The federal investigation followed reporting by The New York Times for a series of articles published in 2008 that revealed systematic abuses of federal Railroad Retirement Board pensions by Long Island Rail Road workers.

The claims of disability made by the seven people charged with obtaining their pensions fraudulently contrasted sharply with their lifestyles, according to court papers. One of the defendants, Gregory Noone, 62, of East Islip, N.Y., who receives $ 105,000 in pension and disability payments each year, plays tennis several times a week and played golf 140 days over the course of one nine-month period, despite his reports that he had severe pain when gripping objects, bending or crouching, the complaint filed in the case said.

Another defendant, Regina Walsh, 63, a railroad office worker who lives in New Hyde Park, N.Y., collects $ 108,000 a year in pension and disability payments; she had complained of significant neck, shoulder and hand pain caused by sitting at a desk and using a computer, and leg pain caused by standing for more than five minutes. But surveillance showed her shoveling snow for over an hour and walking with a baby stroller for 40 minutes, the complaint said.

And a third defendant, Steven Gagliano, 55, of North Babylon, N.Y., who receives more than $ 75,000 in payments annually and claimed to be suffering from severe and disabling back pain, went on a 400-mile bike tour around New York State, the complaint said.

The complaint, 74 pages long, said that "the fraudulent scheme could cause the R.R.B. to pay unwarranted occupational disability benefits exceeding $ 1 billion dollars if disbursed in full."

Federal prosecutors and the F.B.I. were helped in the investigation by inspectors general from the Railroad Retirement Board and the Metropolitan Transportation Authority, the parent agency of the Long Island Rail Road.

Nine defendants appeared on Thursday before United States Magistrate Judge Theodore H. Katz in Manhattan; eight were released on personal recognizance bonds. A ninth defendant was taken to a hospital after becoming ill. The 10th defendant is to appear on Friday. Each defendant faces a maximum of 20 years in prison if convicted.

The Times articles reported that virtually every career employee of the railroad was applying for and receiving disability payments, giving the Long Island Rail Road a disability rate three to four times that of the average railroad.

The Long Island Rail Road, unlike any other commuter railroad in the country, allows workers to collect an early pension, in some cases at age 50, which they can supplement with disability pensions from the federal railroad agency. The Times found that retired railroad employees who had successfully claimed disability were regularly playing golf at a state-owned course without charge — another perquisite of their disability.

Indeed, the railroad's retirement rate was particularly striking when compared with the number of disability pensions at Metro-North Railroad, another subsidiary of the transit authority that serves commuters to New York City with a work force of similar size and composition.

Investigators involved in the case said they brought charges only in cases with the strongest proof and the most egregious instances of fraud. But in a news conference on Thursday, officials gave a warning to railroad retirees with knowledge about any continuing disability fraud.

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