Three years after the NY Times reported on rampant disability fraud among Long Island Rail Road employees, the federal authorities have arrested ten people for their roles in perpetrating the billion-dollar scam. According to the Times, "Most of the people — those charged in the case include seven former railroad workers accused of making false pension claims, the two doctors and a former federal railroad pension agency employee who helped the workers file the claims — were taken into custody in the early morning hours at their homes by F.B.I. agents and state investigators, the people said."

The Times article pointed out how many LIRR employees apply for disability after retiring...and most ended up getting those federal payments. Back in 2004, 97% of employees who retired after the age of 50, applied for and received disability. The implications of retiring early are huge, due to the costs of "overtime, training of replacements and early pension payments." A few days after the article, the feds raided the Long Island office of the Railroad Retirement Board.

You can read the federal complaint (PDF), which alleges that the defendants allowed retiring employees to earn as much as they did pre-retirement and cites these examples of faked claims:

- Retired LIRR engineering manager Gregory Noone collected a combined $105,000 with his disability pension. Despite his severe pain, he was a regular tennis player and a fixture on a local golf course, officials said.

- Ex-railroad human resources manager Sharon Falloon cited "disabling pain" in collecting her disability. But investigators spotted her in a step aerobics class, part of a two-hour workout.

- One-time LIRR sign operator Steven Gagliano completed a 400-mile bike tour in northern New York after filing a disability claim for "severe and disabling pain in back, shoulder and legs."

The LIRR introduced measures to thwart disability abuse after the Times' articles.