11 charged in $1 billion U.S. railroad health scam

NEW YORK — Eleven people were charged Thursday in a $1 billion fraud where employees of a busy New York commuter rail service used fake medical diagnoses to boost their incomes with disability payouts.

The accused, 10 of whom have already been arrested, included seven retired Long Island Rail Road workers, a former union leader, a former pensions employee and two doctors.

One of the accused, former train conductor and union president Joseph Rutigliano, was caught by news photographers enjoying golf in 2008, almost a decade after his retirement as he received disability benefits.

Despite his final year of work featuring no sick days, he was listed as suffering a fractured spine.

"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 in 2008," a statement from prosecutors said.

Long Island Rail Road employees can retire at 50 and all those arrested were aged between 55 and 64 years old.

Manhattan US Attorney Preet Bharara said disability benefits were "designed to be a safety net for the truly disabled, not a feeding trough for the truly dishonest."

"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," he added.

The FBI's assistant director-in-charge, Janice Fedarcyk, said the "massive fraud... could cost more than $1 billion. Until today, this was a game where every retiree was a winner. But today's arrests signal the end of the line for the money train."

All the defendants were charged with conspiracy to commit health care fraud and faced a maximum sentence of 20 years in prison. The 11th defendant was expected to surrender shortly.

Photo credit: Tomasz Sienicki