LIRR retirees may be abusing disability insurance

From the intro to the NY Times story Oct. 7:

The Long Island Rail Road has asked state authorities to broaden their investigation
of federal disability payments collected by its retirees, saying that it is concerned that some former employees may be trying to improperly collect disability payments from private insurers as well.

Virtually all career L.I.R.R. employees — as many as 97 percent in one year — get federal disability payments from the federal Railroad Retirement Board after they retire, The New York Times reported last month.

On Tuesday the railroad gave the state attorney general, Andrew M. Cuomo, and the inspector general of the Metropolitan Transportation Authority evidence raising the possibility that hundreds of its employees were buying private disability insurance policies knowing that the federal railroad board would declare them disabled.

In referring the matter to state investigators, L.I.R.R. officials said their suspicions were raised by two types of disability insurance purchased by railroad employees. One is a general, short-term disability policy; the other guarantees payment of auto loans, credit card debts or personal loans in the event the policyholder is unable to work.

L.I.R.R. officials wrote to the investigators that the pattern of insurance policy purchases “raise a concern in light of the high rate of disability pensions awarded by the R.R.B.”

The railroad has expelled brokers selling short-term disability insurance from L.I.R.R. property, some as recently as last month, L.I.R.R. officials said. And one insurance company, those officials said, will no longer sell disability policies to L.I.R.R. workers.

L.I.R.R. officials discovered these policies while researching a Freedom of Information Act request from The Times seeking the number of employees who pay for private disability insurance through payroll deductions or through their credit union.

In a written response to The Times, which was also forwarded to state authorities, railroad officials said they had found about 1,600 employees paying for disability through payroll deduction. Another 150 or so retired employees have disability insurance.

The office of Gov. David A. Paterson issued a statement saying that the railroad’s new concerns “are incredibly troubling and if proved true unacceptable. We look forward to the results of the attorney general’s investigation.”

Officials said that they found the timing of some of the insurance purchases curious.