Disability Fraud Hurts Company (and Federal) Spend

Why would a railroad with numerous national awards for workplace safety suffer from a "disability epidemic" among retirees? Maybe working on the railroad all the live-long day causes problems that don't appear until, well, the day retirement begins. Or maybe some so-called disabilities result from a sweetened pot of benefits and incentives, not actual accidents.

The New York Times ran an interesting piece this week about the Long Island Rail Road, which boasts a surprising number of disabled retirees, far more than other, similar companies. The story opens with a look at dozens of golfers, retirees from the railroad. "At an age when most people still work, they get a pension and tens of thousands of dollars in annual disability payments -- a sum roughly equal to the base salary of their old jobs," the New York Times reports. "Even the golf is free, courtesy of New York State taxpayers."

The lure of free golf, pension, and thousands of dollars worth of benefits drew 97 percent of last year's L.I.R.R. retirees to apply for disability payments. Workers are allowed to retire -- with pension -- at 50, and a federal agency called the Railroad Retiree Board "almost never says no" to disability claims, which can be filed after a worker has already left their job. Sure, this means taxpayers and passengers, not the company, cover the cost, but this practice still hurts overall spend for L.I.R.R, through money spent on the training of replacements, overtime costs, and early pension payments. Similar tactics could hurt other companies, too, especially those that don't watch for deceit.

"People claimed they had back problems and carpal tunnel," admits one former auditor at the railroad, who retired in good health. "I am sure some really did, but a lot of healthy people were doing it." This includes several white-collar managers, not just those responsible for physical labor, which could cause real disabilities. The auditor adds, knowingly: "They don't reject too many for a disability, you know."

- Amy Edwards

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