A New Hyde Park woman is one of 11 former Long Island Rail Road employee who were arrested last week by the FBI and state law enforcement in connection with a decade-long scam involving hundreds of fraudulent LIRR disabilities claims that could amount to more than $1 billion.
Regina Walsh, 63, a former LIRR director of employee services who lives in New Hyde Park, was one of seven former transit workers charged with taking early retirement and falsely filing disability claims. Two doctors and an office manager were charged for being involved with falsely diagnosing the retiring LIRR workers as disabled, along with two “facilitators” who acted as liaisons between the workers and the doctors.
Walsh annually receives at least $108,000 in combined pension and disability payments, based on a disability she allegedly planned months before she started suffering symptoms.
In her disability application, Walsh claimed that she experienced acute neck, shoulder, and hand pain when sitting at a desk and using a computer, and also claimed she experienced leg pains when standing more than five minutes or when sitting more than 15 minutes, prosecutors said.
But investigators said Walsh has been observed shoveling heavy snow for more than an hour and walking with a baby stroller for approximately 40 minutes.
The other LIRR disability claimants charged in the scheme variously engaged in physical labor, played tennis and golf, regularly exercised at a gym, and in one case, took a 400-mile bicycle tour of northern New York while collecting disability payments.
Three physicians – one recently deceased – passed on 86 percent of the LIRR disability applications filed between 1998 and 2008. The doctors allegedly were using their respective medical practices as what prosecutors called “disability mills” by concocting narratives of disabling physical ailments prior to the employees’ retirement dates for submission to the Railroad Retirement Board.
“Benefit programs like the RRB’s disability pension program were designed to be a safety net for the truly disabled, not a feeding trough for the truly dishonest,” said Manhattan U.S. Attorney Preet Baharara. “It is especially disheartening to think that railroad employees would tell a train of lies to pad their early retirements, and that a handful of doctors would traffic on the credibility of their profession to promote a culture of fraud.”
The Railroad Retirement Board is an independent U.S. agency that administers benefit programs, including disability benefits, for the nation’s railroad workers and their families. A unique LIRR contract allows employees to retire at the relatively young age of 50, provided they have been employed for at least 20 years.
“This massive fraud, an additional burden on cash-strapped commuters, could cost more than one billion dollars,” FBI Assistant Director-in-Charge Janice Fedarcyk said, adding that last week’s arrests signaled “the end of the line for the money train.”
The complaint alleges that hundreds of LIRR employees have exploited an “overlap” between the LIRR pension and the Railroad Retirement Board disability program by pre-planning the date on which they would falsely declare themselves disabled so that it would coincide with their projected retirement date. These false statements, made under oath in disability applications, allowed these LIRR employees to retire as early as age 50 with an LIRR pension, supplemented by Railroad Retirement Board disability annuity enabled by their fraudulent claims.
Between 2004 and 2008, 61 percent of LIRR employees who claimed Railroad Retirement Board benefits were between 50 and 55 year old.
Syosset orthopedist Peter Ajemian recommended at least 839 LIRR workers for disability during the 10 years of systematic abuses covered in the complaint, and received approximately $2.5 in payments from patients and insurance companies related to 453 LIRR annuitant cases reviewed, according to prosecutors. Orthopedist Peter Lesniewski of Rockville Centre was paid approximately $750,000 in payments from patients and insurance companies from a sample related to 134 LIRR annuitant cases reviewed, the complaint charged.
The doctors received payments of $800 to $1,200 – often paid in cash – for their fraudulent case history narratives, prosecutors said. Their patients in those cases received more than $120 million in Railroad Retirement Board disability benefits and $274 million in total.
The other former LIRR employees charged with Walsh include: Gregory Noone, 62, of East Islip, who receives $105,000 in annual pension and disability payments; Sharon Falloon, 56, of Merrick, who receives more than $90,000 in annual pension and disability payments; Richard Ehrlinger, 64, of Bay Shore, who annually receives at least $56,959 in combined pension and disability benefits; Gary Satin, 62,of Mooresville, NC, who annually receives at least $69,559 in combined pension and disability payments; and Steven Gagliano, who annually receives at least $76,810 in combined pension and disability payments.
One of the “facilitators” was Joseph Rutigliano, a former LIRR conductor and union president, who applied for and received an Railroad Retirement Board occupational disability after his retirement in 1999, prosecutors said.
The narrative prepared by Lesniewski stated that Rutigliano fractured his spine in 1988, but offered no explanation for why this 10-year-old injury did not interfere with Rutigliano racking up more than 500 hours of overtime or his failure to require any sick days. Investigators observed Rutigliano playing golf at one particular course about two times per month in 2008, according to the complaint.
Facilitators allegedly referred LIRR workers to the disability doctors, filled out the applications on behalf of their LIRR clients, and assisted and coached their clients to fill out their disability applications so that they would likely receive disability benefits.
