Home Good to know U.S. : 11 people charged over $1 billon pension fraud

U.S. : 11 people charged over $1 billon pension fraud

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New York prosecutors charged 11 people over a $1 billion US pension fraud in which retired workers claimed disability benefits despite regularly playing golf and going to the gym. 

Prosecutors laid out an elaborate scheme in which ex-employees of the Long Island Railroad (LIRR) claimed to be disabled for early retirement so they could boost their pensions by tens of thousands of dollars each year.

Those charged included two doctors who falsely certified that the ex-workers were incapable of doing their job due to bad health. The retirees were subsequently found working or exercising without any hint of injury or pain.

“Benefit programs like the RRB (Railroad Retirement Board) disability pension program were designed to be a safety net for the truly disabled, not a feeding trough for the truly dishonest,” said US Attorney for the southern district of New York Preet Bharara.

The criminal complaint said a “pervasive scheme by doctors, facilitators, and retirees” had set out to defraud the retirement fund of a sum that “could cost more than one billion dollars.”

Each doctor would initially receive between $800 and $1,200 for a fraudulent assessment but would then pocket “millions of dollars of health insurance payments for unnecessary medical treatments.”

Gregory Noone, a retiree who receives $105,000 a year in pension and disability payments, claimed in his disability application that he suffered severe pain when gripping and using simple hand tools.

He also claimed to have pain in his knees, shoulders and back from bending and crouching.  “Nevertheless, Noone regularly plays tennis several times per week, and in a nine-month period in 2008, Noone signed in to play golf at a particular course on 140 days,” the charges state.  Joseph Rutigliano, a former rail conductor and union president who applied for and received RRB disability benefits after retiring in 1999, worked more than 500 hours of overtime the previous year and took no sick leave.

But a doctor then fraudulently stated that Rutigliano broke his spine in 1988, without explaining how the decade-long injury had not affected his ability to work overtime.  “Golf course records and law enforcement surveillance performed in July 2008 indicate that Rutigliano played golf at one particular course about two times per month,” according to the charge sheet.

Sharon Falloon, a LIRR human resources manager who said standing and walking caused her “disabling pain,” and for whom stairs were “very difficult,” was fraudulently certified by a doctor as disabled and receives $90,349 a year.

“Nevertheless, in January 2011, Falloon was surveilled vigorously exercising at a gym, including 45 minutes in a step aerobics class.”

All 11 defendants are charged with conspiracy to commit health care fraud and mail fraud, which carries a maximum sentence of 20 years imprisonment, prosecutors said.

New York, Oct 27, 2011 (AFP)