From Ny Times, September 21, 2008 A Disability Epidemic Among a Railroad’s Retirees By WALT BOGDANICH This article was reported by Walt Bogdanich, Andrew W. Lehren, Robert A. McDonald and Nicholas Phillips and written by Mr. Bogdanich. To understand what it’s like to work on the railroad — the Long Island Rail Road — a good place to start is the Sunken Meadow golf course, a rolling stretch of state-owned land on Long Island Sound. During the workweek, it is not uncommon to find retired L.I.R.R. employees, sometimes dozens of them, golfing there. A few even walk the course. Yet this is not your typical retiree outing. These golfers are considered disabled. 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. Even the golf is free, courtesy of New York State taxpayers. With incentives like these, occupational disabilities at the L.I.R.R. have become a full-blown epidemic. Virtually every career employee — as many as 97 percent in one recent year — applies for and gets disability payments soon after retirement, a computer analysis of federal records by The New York Times has found. Since 2000, those records show, about a quarter of a billion dollars in federal disability money has gone to former L.I.R.R. employees, including about 2,000 who retired during that time. The L.I.R.R.’s disability rate suggests it is one of the nation’s most dangerous places to work. Yet in four of the last five years, the railroad has won national awards for improving worker safety. “Short of the gulag, I can’t imagine any work force that would have a so-to-speak 90 percent disability attrition rate,” said Glenn Scammel, long one of Capitol Hill’s top experts on railroads. “That defies both logic and experience.” Said Dr. J. Mark Melhorn, co-editor of a book on occupational disability published by the American Medical Association: “No one has a rate that high — that just doesn’t happen.” And it is not just engineers, conductors or track workers seeking disability payments. Dozens of retired white-collar managers are doing it as well, including the former deputy general counsel, employment manager, claims manager and director of government and community affairs. In fact, two formerly influential figures at the L.I.R.R. — a married couple, one from management and one from labor — are retired and drawing about $280,000 annually in combined disability and pension payments, according to estimates based on public records. Railroad officials say that as far as they know, most of the disabled workers were able-bodied until their early retirement, and only then filed papers seeking occupational disability payments. “How is it that somebody is occupationally disabled the day after he retires when he wasn’t occupationally disabled the day before he retired?” asked Gary Dellaverson, chief financial officer for the Metropolitan Transportation Authority, the railroad’s parent. The answer, according to government records and dozens of interviews, stems from a combination of factors, including highly unusual L.I.R.R. contracts that allow longtime workers to retire with a pension as early as age 50, federal rules that let railroad retirees claim disability for jobs they no longer hold, and an obscure federal agency called the Railroad Retirement Board that almost never says no to a disability claim. The federal agency pays the disability claims, but losing so many workers to early retirement costs the L.I.R.R. money — in overtime, training of replacements and early pension payments. At the same time, passengers could soon face another fare increase and the transportation authority is seeking more taxpayer support, already half a billion dollars a year, to close a huge budget gap. Union contracts also inflate operating costs through arcane work rules, some dating back to the 1920s, which pad employee paychecks, boosting pension and disability payments in turn. “There are maybe nine different ways to show up at work and get two days’ pay without doing anything extra,” Michael J. Quinn, general chairman of the Brotherhood of Locomotive Engineers and Trainmen at the L.I.R.R., said in an interview. These work rules made it possible for eight senior train engineers to earn from $215,000 to $277,000 in 2006. Younger workers earn much less, and income in the top tier was lower in 2007. Since medical records are private, individual cases could not be examined, and there is little doubt that some of the retirees receiving disability payments actually have debilitating conditions. Still, the L.I.R.R.’s disability rate in recent years has been three to four times that of the average railroad, and is particularly striking when compared with the number of disabilities at Metro-North, the Metropolitan Transportation Authority subsidiary that serves commuters north of New York City. Their work forces are of similar size and composition. Employees perform roughly the same tasks: operating trains, punching tickets and maintaining tracks. And yet in one area — debilitating illness and injury — the difference is so vast as to almost defy medical explanation. One example: disabilities resulting from arthritis and rheumatism. From 2001 through 2007, Metro-North had 32 cases, compared with 753 at the L.I.R.R. In one year, Metro-North had just 2 cases. The L.I.R.R. had 118. For certain diseases of the musculoskeletal system, like a herniated disc, Metro-North had 49 cases. The L.I.R.R. had 850. No one at the two railroads, at the transportation authority or at the Railroad Retirement Board could explain these gaping differences, nor were they even aware of them. “I’ve not seen that until you just showed it to me,” Michael S. Schwartz, the retirement board’s chairman, said in an interview this summer. The board focuses on individual claims, not specific railroads, Mr. Schwartz, said, but added, “We want to make sure that anything we do here is done correctly.” The L.I.R.R. president, Helena E. Williams, called the data compiled by The Times “alarming” and has asked the inspectors general of the retirement board and the transportation authority to investigate. Dr. Melhorn, who has studied disabilities, said the numbers alone were a cause for concern, “in particular if there seems to be a limited number of physicians who are providing this disability impairment.” Work-related injuries and illnesses do not explain the high disability rate. From 2005 through 2007, the L.I.R.R. had 2.91 per 200,000 working hours, compared with 2.98 for New Jersey Transit, 3.13 for Metro-North, 9.42 for PATH and 12.91 for Philadelphia’s transit system, according to an analysis of federal records. The L.I.R.R.’s record also raises questions about why the Railroad Retirement Board approves nearly 100 percent of disability requests from all the nation’s railroads. The board is funded through taxes on railroads and their workers, but Social Security had to contribute $3.6 billion last year to cover expenses. “Everyone in America is going to contribute to that,” said Rick Lifto, assistant vice president of general claims for B.N.S.F., a large freight railroad. B.N.S.F.’s disability rate is lower than the L.I.R.R.’s, but even so, Mr. Lifto said, disabilities still cost his company millions of dollars. John Britt Jr., a former engineer, is an example of someone who benefited not only from the work rules, but also from disability payments. In his last year on the job, during which he earned more than any other engineer, Mr. Britt’s paycheck swelled with $58,853 for tasks that had violated the normal work rules of his union contract, including $2,309 for running diesel and electric trains on the same shift and $3,354 for working through his regular meal period, government records show. He also got $40,553 for overtime, $41,594 for a vacation buyout and $47,337 for a sick leave buyout. For the year, Mr. Britt received $277,075 — five times his base salary and $100,000 more than the highest-paid engineer at Metro-North. Then, after retiring at age 56 in 2006, he was classified as disabled by the Railroad Retirement Board. In fact, the 12 highest paid L.I.R.R. engineers in 2006 — most earning over $200,000 — are now retired and receiving disability payments, records show. And so are the top-earning conductors, three of whom had incomes over $190,000. Mr. Britt could not be reached for comment, but a woman responding to a note left at his listed residence said, “Our family has no comment.” The L.I.R.R. president, Ms. Williams, who has been on the job a little more than a year, says she recognizes the need to fix the railroad’s problems. The transportation authority’s inspector general has praised her willingness to quickly address deficiencies once they are identified. She has taken steps to help curb overtime, and the railroad’s on-time record has never been better. But many problems are beyond her control. Without the political support needed to weather a strike, management has been unwilling to press for the removal of costly work rules, according to former management and union officials. The railroad also has no authority to intervene in federal disability cases. Changes in the railroad’s contract have made it more difficult for many employees to retire early, although it is still possible for them to receive a regular pension at age 55, and 1,100 long-term employees were still working under the old provisions at the end of 2007. If the transportation authority needed any expertise on disabilities, it could have turned to a former board member and union official, Joseph Rutigliano, who became occupationally disabled after retiring in late 1999 at age 52. Mr. Rutigliano said in an interview that he “crushed” his back in a fall at home and eventually could no longer work as a conductor, where his duties included walking through trains taking tickets and repeatedly climbing in and out of railroad cars. “I needed to use my legs and my back every day,” he said. “It meets the criteria for what the railroad retirement system says prevents you from performing your railroad occupation.” If Mr. Rutigliano’s condition kept him from working, it did not stop him from golfing. He was a regular this summer at Sunken Meadow, often walking the course twice a week. As a disabled worker, he played free. A Puzzling Discrepancy About five years ago, L.I.R.R. officials say, they wanted to know more about why some employees were retiring and then filing for occupational disability. Because the L.I.R.R. had made progress in reducing workplace accidents, railroad managers wondered if something was amiss, so they contacted the Railroad Retirement Board. But L.I.R.R. officials said the retirement board assured them that the number of disabilities among former L.I.R.R. workers “was typical of railroads industrywide.” Nothing more happened, officials said, until several months ago, when they were contacted by The Times and shown numbers far exceeding the industry average. “We have been asked by newspaper reporters to explain why the L.I.R.R. has a high number of retirees who receive a disability annuity,” Ms. Williams said on July 15 in a letter to Mr. Schwartz of the retirement board. In a letter late last month to the retirement board’s inspector general, Ms. Williams expressed specific concerns about why so many retirees were citing the same two disease categories. “I find the high rate of R.R.B. disability awards in these categories alarming,” she wrote, asking the inspectors general from the retirement board and the transportation authority to look into the matter. Barry L. Kluger, inspector general for the authority, said, “The numbers and the cost I think do merit the kind of review that’s going on at this time.” Ms. Williams said the railroad also examined its own disability program, which, unlike the retirement board’s, handles disability claims from current employees. The figures looked nothing alike. The number last year, she said: zero. “So, the question I have is, ‘What is the medical criteria used?’ ” Ms. Williams said in an interview, referring to the retirement board. “How are they evaluating the standards for an occupational disability?” Outside the insular world of railroads, little is known about the Railroad Retirement Board. With headquarters not in Washington, but in an old insurance building in Chicago, the board is overseen by three presidential appointees: one from labor, one from management and one representing consumers. The board, created in the 1930s, performs many of the same functions as Social Security, but for rail workers only. Both offer disability programs, but the similarities end there. A worker must be incapable of any gainful employment to be classified as disabled by Social Security. But rail workers can get disability payments even if they can perform other jobs — just not their regular railroad jobs. This provision, enacted in 1946, was based on the view that rail workers had especially hazardous jobs involving skills not easily transferred to other occupations. To document their occupational disability, rail workers can choose their own doctors who provide the board with detailed medical evaluations, usually including M.R.I. test results. Workers must also describe in full the physical demands of their rail jobs. L.I.R.R. officials say they have little interaction with the retirement board. “We do not have any representation on the board,” Ms. Williams said. “We are not asked for any medical evidence. We are not participants in any way. This is something employees do after they leave employment.” Cathleen Quinn, who runs the Long Island office of the retirement board, said her office gets “mainly orthopedic disabilities — herniated discs, bad knees.” L.I.R.R. employees favor certain doctors, and their disability applications are sometimes so similar as to be almost interchangeable, said one Long Island resident who has seen dozens of those applications. That person said that M.R.I.’s merely document physiological changes that commonly affect people over the age of 50. “I’ve never heard of anybody not finding something,” said the person, who did not wish to be identified for fear of angering friends who are getting disability payments. Dr. Robert K. McLellan, section chief for occupational and environmental medicine at Dartmouth-Hitchcock Medical Center in New Hampshire, said M.R.I.’s alone were not enough to determine whether someone was incapacitated. “As we get older, we accumulate all kinds of abnormalities on M.R.I.’s,” Dr. McLellan said. “You can’t use an M.R.I. to say, ‘This person must have really bad back pain and therefore must be disabled.’ It is extremely common to have disc bulge and disc degeneration and disc herniation and have no symptoms whatsoever.” He said most people with a herniated disc recover within 6 to 12 weeks “without any intervention except time.” To account for those who might regain their ability to work, Social Security requires medical re-evaluations for the disabled, said Mark Lassiter, a Social Security spokesman. The Railroad Retirement Board has no such provision for an occupational disability and does not require any rehabilitation therapy. In all, the retirement board is far more generous in handing out disabilities than the Social Security Administration, which says it rejects roughly 45 percent of its applicants for total disability. The railroad board rejects only 2 percent of those seeking occupational disability, a lower threshold than total disability. “You have to say to yourself, ‘Why is Railroad Retirement Board so different?’ ” Ms. Williams said. Martin J. Dickman, the retirement board’s inspector general, acknowledged in an interview that the retirement board’s rejection rate was “almost nonexistent,” but he added: “If Congress wants to change the statute and raise the threshold, that’s up to Congress. That’s not up to us to do.” Mr. Lifto, the B.N.S.F. claims official, said he was so concerned about the board’s generosity that he and representatives of other freight railroads went to Chicago a couple of years ago to see how the retirement board decided disability cases. He said he couldn’t recall finding a single applicant who had been rejected on medical grounds — only for incorrect or incomplete paperwork. Railroad management’s concerns got support from an internal retirement board audit in 2000 that found serious shortcomings in the disability program. A copy of that report, obtained by The Times, stated that medical files did not justify all the disabilities awarded. “This number could be as high as 10 to 20 percent of the cases reviewed,” according to the report, by two physician auditors. The audit also found that disability decisions were “largely made on the medical disease being present rather than an understanding of the functional limitations created by that disease.” The report also suggested that applications were overstating job demands. In a follow-up audit submitted in June of this year, one of the auditors, Dr. Natalie P. Hartenbaum, a management representative, found the problem had not been resolved. “Dr. Hartenbaum did not feel that the medical opinions rendered sufficiently took into account the actual work performed,” the audit stated. A second doctor representing labor found fewer faults than Dr. Hartenbaum. Although railroad work is not as difficult or as dangerous as in years past, it does require physical activity that can strain the body. Engineers have to climb ladders. Conductors are on their feet for hours. Charles Anderson, a former L.I.R.R. engineer, said a shoulder injury unrelated to work made it hard for him to climb up and down on the train. “I was doing it with one arm,” Mr. Anderson said. “The thing that really made me retire is I fell and I was by myself.” Mr. Rutigliano, the former transportation authority board member, said injured workers are seeking only what the law provides. “The doctors don’t lie,” he said. “They got X-rays, M.R.I.’s. They have bad backs. They have hearing disabilities.” Steven A. Bartholow, general counsel for the retirement board, said workers for the most part would not give up well-paying jobs unless there was a good reason. “I think most of the people who apply for occupational disability annuities are in fact occupationally disabled,” Mr. Bartholow said. “They are hurting.” Unusual Rules If L.I.R.R. workers are hurting, it is also true that they have an added financial incentive to seek disability. Unlike other rail workers, they have a contract that allows them to get an early pension, which they can then supplement with disability payments. L.I.R.R. employees hired before 1988 with 20 years of service can start drawing on that pension at age 50. In fact, most workers start filing for disability in their 50s, records show. With monthly disability payments averaging about $3,000 a month, plus pension, retirees can earn their base salary and sometimes more until they reach normal retirement age. “When you’re 50, you’re still active,” said Tom Prendergast, a former L.I.R.R. president who is now running a transit system in Canada. “You like to work on your house, go out on your boat, travel, whatever.” In each year since 2000, between 93 percent and 97 percent of employees over 50 who retired with 20 years of service also received disability payments. Four years ago, the transportation authority’s inspector general cautioned that occupational disabilities could have financial implications for the L.I.R.R.’s pension plan, which it found to be “extremely” underfunded. “An added incentive for employees to take their pensions is the ease with which they can qualify for occupational disability,” the inspector general said in a 2004 report. The railroad for a variety of reasons had to triple its annual contributions to the pension fund to $94 million in 2004 from $32 million in 2000. There are other benefits to being a disabled L.I.R.R. employee. Those deemed to be so severely incapacitated that they cannot hold any job — not just their regular railroad job — also get health care through Medicare, as well as special tax breaks. Nearly half of L.I.R.R. workers classified as occupationally disabled are later reclassified by the retirement board as totally disabled, records show. And then there is the free golf. Debbie Keville, an official with the state’s Office of Parks, Recreation and Historic Preservation, explained who qualifies for what is called an Access Pass, allowing the disabled free use of sports facilities in state parks: “You have to have a functional disability. By that, I mean a person has to have severe limitations — for example, with sight impairment, you have to have a high level of visual loss — you can’t have your better eye seeing fine. If you have to have an ambulatory aid — such as a cane — you need to have it at all times, not just some of the time. Mental retardation or developmental disability qualifies you.” Ms. Keville says her agency isn’t in the business of saying no to the truly disabled. “You’ve probably heard of blind and visually impaired golfers,” she said. “They’re out there.” Ms. Keville said the state could not investigate each and every case. “We have no way of knowing why or how they are disabled, just that the government says they are,” she said. Maximizing a Paycheck The size of a disability payment, as well as a pension, is determined partly by what an employee earns in the five years before retirement. Here again, the L.I.R.R.’s unique work rules give employees an edge. Take the case of Edward J. Koerber. On a spring evening in 2004, Mr. Koerber reported for his overnight shift as a train engineer at the Jamaica Storage Yard. By the end of his eight-hour shift, Mr. Koerber would earn four days’ pay for one day’s work, transportation authority records show. Assigned to the railyard that night, Koerber was instead sent to passenger service. Under union rules, this change entitled him to an extra day’s pay. Over the next few hours, he ended up operating both an electric engine and a diesel engine. These dual duties earned him a second day’s pay. Around 2 a.m., Mr. Koerber took an engine in for maintenance. With that came another day’s pay. These three contract violations resulted in penalty payments that totaled $718. He also earned, among other things, $157 for a few hours of overtime and $15 for not getting to eat during his normal lunch break. The L.I.R.R. was supposed to pay him $247 for his work that day. Instead, he ended up with $1,177. Shifts like this were not that unusual. Mr. Koerber pulled off seven others like it that year. Nor was he alone: L.I.R.R. engineers were paid four days’ wages for a single day of work on 30 occasions in 2004. These cases were documented in a 2006 report by the transportation authority’s inspector general, who also found more than 500 examples of engineers making three days’ wages in one day and nearly 150 examples of conductors doing the same. That year, Mr. Koerber earned $211,586, according to payroll data. But his compensation the next year was even more remarkable: $276,456. Only the president of the railroad earned more: $287,658. Soon after, Mr. Koerber retired from the L.I.R.R., and he ultimately took with him more than just a pension. In 2006, records show, he began receiving disability payments from the Railroad Retirement Board. In all, his retiree income is about $170,000 a year, according to estimates based on public records. Mr. Koerber, who is now 60, declined to comment. Metro-North operates differently. “We don’t have full-day penalty payments here,” says Jane Murawski, assistant director of labor relations at Metro-North. “It would never be that the person works their eight-hour shift and then they get another eight hours and another eight hours for other things. That doesn’t happen here.” Metro-North, formed in 1983 from the old Conrail commuter lines, largely inherited the work rules of its parent, which was mostly a freight railroad. But because the L.I.R.R. has always been primarily a commuter railroad, many existing labor agreements remained after the authority took it over in 1966. The disparity in pay between the two railroads is considerable. At the L.I.R.R, 107 nonmanagement workers earned more than $150,000 in 2006, compared with only a handful at Metro-North. “We have the best work rules in the industry nationwide — I would say worldwide,” said Mr. Quinn, the official with the Long Island chapter of the engineers union. “They’ve never been able to negotiate them away from us.” Struggle Over Work Rules Over the years, management has tried to chip away at those work rules. In the 1980s, L.I.R.R. officials became worried about losing so many veteran workers to early retirement, many of whom were quitting to take other jobs. So management made early retirement an issue during negotiations. The result: an 11-day strike. In the end, the rules were changed so that employees hired after 1987 had to reach age 55 and work 30 years before retiring on a normal pension. But that did not affect thousands of employees hired before 1988. And in time, it started to become apparent that second jobs were not necessary, not when it was so easy to be classified as occupationally disabled. During contract negotiations in 1994, management also tried to take a stand against work rule provisions that inflated earnings. But the political will to fight for these changes evaporated after workers went on strike, as they were legally entitled to do, unlike some other transit workers. “What’s lacking is leadership on the public side, people with strong beliefs and the courage to act on those beliefs,” said Louis Anemone, a former security director of the transportation authority. “There’s no stomach for it on the management level, and none of it on the political level.” There is a reason for that, Mr. Quinn says: “We move millions of people a week. And for this railroad to stop, people would be screaming. Politicians would have to answer questions: ‘What the hell is this? What are you doing?’ So they let us kind of co-exist.” But work rules and penalty payments, much like overtime, can be managed to reduce their financial impact — something that Ms. Williams, the railroad president, says she is trying to do. Over the years, the railroad has also made its share of serious mistakes. In 2006, the transportation authority inspector general found a 50 percent error rate when sampling sick-leave buyouts, a negotiated entitlement in which the railroad buys unused sick days. The buyouts cost the L.I.R.R. nearly $2 million in 2006. “The Long Island Rail Road has to confront its culture of lethargy and develop a proactive management structure,” Matthew D. Sansverie, the authority’s inspector general, wrote in a 2006 report. “The failure of staff and supervisors to question things that do not make sense must end.” Getting overtime costs under control has been a longstanding problem. “There continues to be lax controls over overtime and penalties earned by crews in the railyards,” authority investigators said in 2006. Early retirements by those seeking disability payments haven’t helped. “The railroad has experienced a substantial number of retirements in the last seven years,” said Ms. Williams. “It takes two years to train an engineer.” The L.I.R.R. has been successful under Ms. Williams in reducing overtime and some penalty payments, but eliminating those penalties is another matter. “We have not been successful in achieving that in collective bargaining,” she said. One penalty payment agreed to by management proved so embarrassing that the union was willing to give it up. In the 1980s, workers who maintained the track corridors got an extra two hours of pay if it rained. But because the agreement was poorly constructed, it opened the gates to abuse. The intent was to pay extra for work performed in the rain, but workers got paid even if it rained going to or from the work site. In one year, they got rain pay on 42 days when no rain fell, transportation authority investigators said in a 1989 report. One union official was quoted as saying that workers deserved the supplement “even if a bird flies over and urinates on them.” In one six-month period, rain pay cost the railroad $1.1 million. “Some of these things are ridiculous,” said Gerard P. Bringmann, general chairman of the Long Island Rail Road Commuter Council. “It makes absolutely no sense. Any company would go bankrupt that operates that way.” White-Collar Disabled If L.I.R.R. managers had decided in years past to investigate disabilities, they would not have had to look very far; most of them were retiring and getting disability payments, too. Records show that in one recent three-year period, more than 60 white-collar managers retired and were classified as disabled. Like union members, many managers can retire at age 50 or 55 with benefits. One such retiree was Janet Lewis, a former director of government and community affairs. Ms. Lewis declined to discuss the nature of her disability, saying it was a private matter. Her husband, Michael J. Canino, is also retired on disability. He is a former authority board member and chairman of the L.I.R.R. labor council, which represents all of the L.I.R.R. unions. Between their pensions and disability payments, Ms. Lewis and Mr. Canino take in about $280,000 annually, according to estimates based on public records. Mr. Canino could not be reached for comment. On two occasions Ms. Lewis said he was out of town, and he did not return a message left at his house. Walter Kueffner is one manager who didn’t say he was disabled, even though many others around him did. “People claimed they had back problems and carpal tunnel,” said Mr. Kueffner, a former auditor at the railroad. “I am sure some really did, but a lot of healthy people were doing it.” Disability awards were being handed out when he started at the railroad in 1968, and the numbers “got bigger as time went on,” he said. “They don’t reject too many for a disability, you know.” Mr. Kueffner said that while he’s not “a saint,” the thought of claiming disability never crossed his mind for one simple reason: “I didn’t have a disability,” he said. “I was doing a job that people do everywhere. I worked at a desk and I retired in good shape.” Reporting was contributed by Katia Bachko, Ivan Dominguez, Alex Lang and Elana Margulies.