Railroad Retirement Board
Review of Commuter Railroad Occupational Disability Claims Reveals Potential Program Vulnerabilities Gao ID: GAO-09-821R September 9, 2009In fall 2008, a series of news reports revealed the relatively high number of workers at one commuter railroad--the Long Island Rail Road (LIRR)-- who have applied for and been approved for occupational disability benefits by the U.S. Railroad Retirement Board (RRB). According to RRB officials, a number of federal agencies, including the Federal Bureau of Investigation, Social Security Administration, and the Department of Health and Human Services, have launched investigations in response to issues raised. In addition, the New York Attorney General's office is conducting a criminal investigation.
Our analysis identified some notable differences between claims filed by LIRR workers and those filed by other commuter rail workers that reveal potential program vulnerabilities, as illustrated by the following examples: (1) LIRR workers applied for occupational disability benefits at a rate of 12 higher than workers from the other commuter railroads in fiscal year 2007. However, RRB approved all commuter rail workers and the same rate- nearly 100 percent. (2) Nearly all LIRR worker claims were for musculoskeletal impairments, such as lower back problems, compared to about half of workers from other commuter railroads. (3) We observed in our review of claims from LIRR and Metro-Norther Railroad that most LIRR workers who filed claims provided RRB with medical evidence from one of three doctors. We did not observe these same patterns for Metro-North Railroad. In our prior work, we found that numerous claims with evidence from the same doctors can be an indicator of potential fraud or abuse. In addition, while RRB maintains data on claimants' doctors in paper claims files, these data are not currently in a format that facilitates analysis or allows the agency to detect unusual patterns. We found that RRB has not analyzed occupational disability data by railroad or performed other analyses that could have enabled the agency to identify such unusual patterns in occupational disability applications from LIRR workers. RRB implemented a five-point plan, in October 2008, to enhance its oversight of LIRR claims, which includes ordering its own medical examinations for all LIRR claimants to supplement medical evidence provided by the claimants and conducting continuing disability reviews for all LIRR annuitants who were age 54.5 and younger as of October 21, 2008. While RRB officials stated that it is too early to assess the effect of the plan on disability decisions, the agency has approved nearly all of the occupational disability claims decided under the plan as of April 30, 2009.
GAO-09-821R, Railroad Retirement Board: Review of Commuter Railroad Occupational Disability Claims Reveals Potential Program Vunerabilies
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GAO-09-821R:
United States Government Accountability Office:
Washington, DC 20548:
September 9, 2009:
The Honorable John L. Mica:
Ranking Member:
Committee on Transportation and Infrastructure:
House of Representatives:
The Honorable Bill Shuster:
Ranking Member:
Subcommittee on Railroads, Pipelines, and Hazardous Materials:
Committee on Transportation and Infrastructure:
House of Representatives:
Subject: Railroad Retirement Board: Review of Commuter Railroad
Occupational Disability Claims Reveals Potential Program
Vulnerabilities:
In fall 2008, a series of news reports revealed the relatively high
number of workers at one commuter railroad--the Long Island Rail Road
(LIRR)--who have applied for and been approved for occupational
disability benefits by the U.S. Railroad Retirement Board (RRB).
According to RRB officials, a number of federal agencies, including the
Federal Bureau of Investigation, Social Security Administration, and
the Department of Health and Human Services, have launched
investigations in response to issues raised. In addition, the New York
Attorney General's office is conducting a criminal investigation.
RRB is a federal agency responsible for administering the disability
and retirement benefit programs for eligible railroad workers and their
families under the Railroad Retirement Act. This includes providing
occupational disability annuities for workers who have physical or
mental impairments that prevent them from performing their specific
railroad job, regardless of whether they can perform other work. For
example, a railroad engineer who cannot frequently climb, bend, and
reach, as required by the job, may be found occupationally disabled. A
railroad worker is eligible to apply for an occupational disability at
age 60 if he or she has 10 years of service, or at any age with at
least 20 years of service.[Footnote 1] In fiscal year 2007, RRB paid
more than $1.7 billion in occupational disability benefits to
approximately 64,000 workers.
In this context, you asked us to study the experiences of LIRR workers
who submitted applications for RRB occupational disability benefits.
Specifically, we focused on the following objectives: (1) determine
what is known about the extent to which LIRR workers have applied for
and received occupational disability benefits, compared to workers at
other commuter railroads, and (2) identify the steps RRB has taken to
ensure that only eligible LIRR workers receive occupational disability
benefits.
We limited our review to the LIRR and the seven other commuter
railroads covered by the Railroad Retirement Act.[Footnote 2] Other
railroads, such as freight railroads and Amtrak, were outside of our
scope. We analyzed data from multiple RRB data systems to (1) determine
the number of occupational disability benefits RRB awarded in calendar
years 2004 through 2007, relative to employment, for LIRR and the other
commuter railroads[Footnote 3] and (2) determine application and
approval rates for occupational disability benefits for workers at
these railroads, for applications filed in fiscal year 2007.[Footnote
4] We determined that the data are sufficiently reliable for our
purposes. We also conducted in-depth interviews with management
officials and claims examiners from RRB's headquarters in Chicago and
its Westbury field office in Long Island, New York, as well as
officials from LIRR, Metro-North Railroad, and the Metropolitan
Transportation Authority Office of the Inspector General.[Footnote 5]
We also coordinated with RRB's and the Social Security Administration's
Offices of the Inspector General. In addition, we reviewed a
statistically random, projectable sample of occupational disability
claims files for the LIRR and a similar commuter railroad, Metro-North,
to provide context for our analyses.[Footnote 6] Finally, we reviewed
RRB's five-point plan, effective as of October 2008, that was designed
to ensure that only those LIRR workers who are eligible for
occupational disability benefits receive them.
We conducted this performance audit from November 2008 to September
2009 in accordance with generally accepted government auditing
standards. These standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe the evidence obtained provides a reasonable basis for our
findings based on our audit objectives.
On June 30, 2009, we briefed your staff on the results of our study of
LIRR workers' claims for RRB occupational disability benefits. This
report formally conveys the information provided during that briefing.
In summary, our analysis identified some notable differences between
claims filed by LIRR workers and those filed by other commuter rail
workers that reveal potential program vulnerabilities, as illustrated
by the following examples:
* LIRR workers applied for occupational disability benefits at a rate
12 times higher than workers from the other commuter railroads in
fiscal year 2007. However, RRB approved all commuter rail workers at
the same rate--nearly 100 percent.
* Nearly all LIRR worker claims were for musculoskeletal impairments,
such as lower back problems, compared to about half of workers from the
other commuter railroads.
* We observed in our review of claims from LIRR and Metro-North
Railroad that most LIRR workers who filed claims provided RRB with
medical evidence from one of three doctors. We did not observe these
same patterns for Metro-North Railroad. In our prior work, we found
that numerous claims with evidence from the same doctors can be an
indicator of potential fraud or abuse.[Footnote 7] In addition, while
RRB maintains data on claimants' doctors in paper claims files, these
data are not currently in a format that facilitates analysis or allows
the agency to detect unusual patterns.
We found that RRB has not analyzed occupational disability data by
railroad or performed other analyses that could have enabled the agency
to identify such unusual patterns in occupational disability
applications from LIRR workers. RRB implemented a five-point plan, in
October 2008, to enhance its oversight of LIRR claims, which includes
ordering its own medical examinations for all LIRR claimants to
supplement medical evidence provided by the claimants and conducting
continuing disability reviews for all LIRR annuitants who were age 54.5
and younger as of October 21, 2008. While RRB officials stated that it
is too early to assess the effect of the plan on disability decisions,
the agency has approved nearly all of the occupational disability
claims decided under the plan as of April 30, 2009.
Agency Comments and Our Evaluation:
We provided a copy of this report to the Chairman, Labor Member, and
Management Member of the Railroad Retirement Board for review and
comment. We have reproduced the Chairman and the Labor Member's
comments on our draft report in enclosure II, and the Management
Member's comments in enclosure III. The board also provided one
technical comment on our draft report, which we incorporated.
Two of the board members were of the opinion that the high rate of
occupational disability applications from workers at the Long Island
Rail Road (LIRR) was an anomaly, but stated that the agency was taking
steps to identify any other unusual patterns in occupational disability
applications. They acknowledged that the agency does not currently have
some of the data that may be necessary to detect such unusual patterns,
but noted that a newly created staff position with responsibility for
quality control oversight will have authority to develop new methods of
data collection nationwide.
The third board member expressed concern that there may be inherent
systemic weaknesses in the occupational disability program that warrant
further independent review of the agency's program integrity and
quality assurance controls. Although our work was limited to the
commuter railroads, a nearly 100-percent approval rate in a federal
disability program is troubling, and could indicate lax internal
controls in RRB's decision-making process, weaknesses in program
design, or both. We have identified these and other areas in the
occupational disability program that require further evaluation.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to the
Chairman, Labor Member, and Management Member of the Railroad
Retirement Board, relevant congressional committees, and other
interested parties. In addition, the report will be available at no
charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-7215 or bertonid@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made key contributions
to this report are listed in enclosure IV.
Signed by:
Daniel Bertoni:
Director, Education, Workforce, and Income Security Issues:
[End of section]
Enclosure I: Railroad Retirement Board Occupational Disability Benefit
Program Briefing Slides:
Railroad Retirement Board: Review of Commuter Railroad Occupational
Disability Claims Reveals Potential Program Vulnerabilities:
Staff Briefing for the Ranking Members of the Subcommittee on
Railroads, Pipelines, and Hazardous Materials, and the Committee on
Transportation and Infrastructure, House of Representatives:
June 2009:
Introduction:
The U.S. Railroad Retirement Board (RRB) provides an occupational
disability benefit to workers who are unable to perform their specific
railroad jobs. In fiscal year 2007, RRB paid more than $1.7 billion in
occupational disability benefits to about 64,000workers.[Footnote 8]
To be occupationally disabled, a worker must have a permanent physical
or mental condition that prevents him or her from performing his or her
railroad job. For example, a railroad engineer who cannot frequently
climb, bend, and reach, as required by the job, may be found
occupationally disabled.
In fall 2008, a series of news reports raised concerns about the large
number of workers from the Long Island Rail Road (LIRR) who applied and
were approved for occupational disability benefits by RRB.
Concerns were also raised that:
* LIRR workers were claiming the same types of musculoskeletal
impairments, such as herniated discs.
* In addition to line workers with more physically demanding jobs,white-
collar LIRR management workers with potentially less physically
demanding jobs also were accessing the program at high rates.
According to RRB officials, a number of federal agencies, including the
Federal Bureau of Investigation, Social Security Administration, and
the Department of Health and Human Services, have launched
investigations in response to these concerns. In addition, the New York
Attorney General‘s office is conducting a criminal investigation.
Objectives:
For this briefing, we focused on the following objectives:
1) Determine what is known about the extent to which LIRR workers have
applied for and received occupational disability benefits, compared to
workers at other commuter railroads.
2) Identify the steps RRB has taken to ensure that only eligible LIRR
workers receive occupational disability benefits.
Scope and Methodology:
To answer our questions, we:
* Limited our review to LIRR and the seven other commuter railroads
covered by the Railroad Retirement Act: Massachusetts Bay Commuter
Railroad, Metro-North Railroad, New Jersey Transit, Northeast Illinois
Commuter Railroad, Northern Indiana Commuter Transportation District,
Port Authority Trans-Hudson Corporation, and Southeastern Pennsylvania
Transportation Authority.[Footnote 9] Commuter rail workers made up
about 10 percent of total rail employment in 2007.
* Analyzed agency data on the number of workers at LIRR and the seven
other commuter railroads who met the age and service requirements for
occupational disability and the number of occupational disability
awards for calendar years 2004 through 2007 for these railroads.
[Footnote 10]
* Performed analyses using multiple RRB databases to determine
application and approval rates for occupational disability benefits for
workers at LIRR and the seven other commuter railroads, for
applications filed in fiscal year 2007.[Footnote 11]
* Assessed the reliability of RRB data and determined that the data are
sufficiently reliable for our purposes.
* Conducted in-depth interviews with management officials and claims
examiners from the RRB‘s headquarters in Chicago and its Westbury Field
Office in Long Island, N.Y., as well as officials from LIRR, Metro-
North Railroad, and the Metropolitan Transportation Authority Office of
the Inspector General.[Footnote 12] We also coordinated with RRB‘sand
the Social Security Administration‘s Offices of the Inspector General.
* Reviewed a random, projectable sample of LIRR and Metro-North claims
filed in fiscal year 2007 to provide context for our data analyses.
However, we did not assess the quality of medical evidence provided by
doctors and specialists.[Footnote 13]
* Reviewed RRB‘s new five-point plan, designed to ensure that only
those LIRR workers who are eligible for occupational disability
benefits receive them.
* We conducted this performance audit from November 2008 to September
2009 in accordance with generally accepted government auditing
standards. These standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe the evidence obtained provides a reasonable basis for our
findings based on our audit objectives.
Summary of Results:
In fiscal year 2007, LIRR workers applied for occupational disability
benefits at a rate 12 times higher than workers from the other commuter
railroads. However, RRB approved all commuter rail workers at the same
rate”nearly 100 percent.
RRB does not analyze occupational disability data by railroad or
perform other analyses that could enable them to identify unusual
patterns in occupational disability applications, such as:
* inconsistencies in application and approval rates, occupations, and
types of impairments; and;
* workers seeing the same doctors.
RRB has implemented a five-point plan to enhance its oversight of LIRR
claims. While RRB officials stated that it is too early to assess the
effect of the plan on disability decisions, the agency has approved
nearly all of the occupational disability applications decided under
the plan, as of April 30, 2009.
Background: RRB Occupational Disability Program:
RRB is a federal agency responsible for administering the disability,
retirement, sickness, and unemployment benefit programs for eligible
railroad workers and their families.[Footnote 14]
RRB provides occupational disability benefits to workers who it
determines can no longer perform their specific railroad jobs due to
their impairments.
A railroad worker is eligible to apply for an occupational disability
benefit at age 60 with 10 years of service, or at any age with at least
20 years of service.[Footnote 15]
Background: Social Security Disability Criteria:
If a worker is found unable to perform his or her specific railroad
job, RRB also determines whether the worker meets the more stringent
Social Security disability criteria”whether the worker is able to
perform any work in the national economy.
Workers found eligible under Social Security criteria may qualify for
early Medicare and other financial benefits, in addition to their RRB
occupational disability benefits.
RRB makes most of these decisions, but the Social Security
Administration (SSA) provides most of the funding to pay benefits when
an occupationally disabled rail worker is also found to be disabled
under SSA disability criteria.[Footnote 16]
Background: The RRB Occupational Disability Determination Process at a
Glance:
Figure 1: The Occupational Disability Determination Process:
[Refer to PDF for image: illustration]
Railroad worker files for disability benefits at RRB field office;
Claim adjudicated at RRB headquarters, Chicago;
Step 1: Determine eligibility under RRB occupational disability
criteria:
* 20 years of railroad work experience at any age or 10 years at age
60;
* Permanent physical or mental condition that prevents one from
performing work in his or her regular railroad job;
If denied: RRB occupational disability criteria is not met;
If approved: Benefits funded through RRB.
Step 2: Determine eligibility under SSA disability criteria:
* 20 quarters of coverage in the 10 years preceding the disability;
* Permanent physical or mental condition that prevents one from
performing any gainful work in the national economy;
If denied: SSA disability criteria not met. Worker maintains RRB
occupational disability benefits.
If approved: Benefits jointly funded by RRB and SSA.
Source: GAO analysis of RRB procedures manual; images: Art Explosion.
[End of figure]
Background: Rail Workers Can Receive Occupational Disability and
Pension Benefits Concurrently:
Workers can receive occupational disability benefits from RRB, as well
as non-RRB retirement benefits, such as pensions and health insurance,
from their former railroad employer.
LIRR workers hired before 1988 can retire and receive LIRR pension
benefits as young as age 50 with 20 years of service (closed plan).
[Footnote 17] Workers hired after that date can retire and receive LIRR
pension benefits as young as age 55 with 30 years of service.
Officials representing rail management and labor told us that while
other railroads may offer pensions, the LIRR‘s closed plan is more
generous in terms of its age and service requirements.
Objective One: Determine what is known about the extent to which LIRR
workers have applied for and received occupational disability benefits,
compared to workers at other commuter railroads:
LIRR Workers Applied at a Rate 12 Times Higher Than Workers from the
Other Commuter Railroads Combined:
In fiscal year 2007, LIRR workers filed applications at a rate 12 times
higher than all of the other seven commuter railroads combined,
relative to the number of workers who met the minimum age and service
requirements to apply for occupational disability benefits.
In addition, our review of occupational disability award data from
calendar years 2004 through 2007 showed that LIRR workers have
consistently applied at this high rate.
Figure 2: Occupational Disability Applications Filed in Fiscal Year
2007 from LIRR and the Other Commuter Railroads, Relative to the Number
of Eligible Workers:
[Refer to PDF for image: illustration]
Long Island Railroad:
17.0 percent application rate:
1,398 eligible workers;
237 applications.
All other commuter railroads:
6,945 eligible workers;
98 applications.
Source: GAO analysis of RRB data.
Note: The circles in the graphic were drawn for illustrative purposes.
As such, the circles do not accurately reflect the magnitude of the
difference in the eligible populations, which is even greater than the
graphic implies. In order to determine the rate at which LIRR workers
applied for occupational disability benefits, compared to the
application rate for the workers from the other commuter railroads
combined, we divided the LIRR application rate (17.0%) by the rate for
all other commuter railroads (1.4%). We found that LIRR workers applied
at a rate 12.1 times higher than the application rate for workers from
all other commuter railroads combined.
[End of figure]
RRB Approved Nearly All Commuter Rail Claimants for Occupational
Disability Benefits, but Fewer LIRR Workers Met More Stringent
Disability Standards:
RRB approved nearly all commuter rail workers who applied for
occupational disability in fiscal year 2007, regardless of railroad.
However, RRB found fewer LIRR workers met the more stringent Social
Security disability criteria, compared to workers at the other commuter
railroads.[Footnote 18]
Figure 3: RRB Approval Rates for Workers from LIRR, Compared to Those
from the Other Commuter Railroads:
[Refer to PDF for image: illustration]
Occupational criteria:
99.6% of LIRR workers approved;
100% of workers from other commuter railroads approved.
Social security disability criteria:
39.1% of LIRR workers approved;
79.4% of workers from other commuter railroads approved.
Source: GAO analysis of RRB data.
[End of figure]
Nearly All LIRR Worker Claims Were for Musculoskeletal Impairments:
Figure 4: Distribution of Impairments Claimed by LIRR Workers in Fiscal
Year 2007:
[Refer to PDF for image: pie-chart]
Diseases of the musculoskeletal system and connective tissue: 94.5%;
Diseases of the nervous system and sense organs: 3.0%;
Other: 2.5%.
Source: GAO analysis of RRB data.
[End of figure]
About Half of Worker Claims at the Other Commuter Railroads Were for
Musculoskeletal Impairments:
Figure 5: Distribution of Impairments Claimed by Workers from the Other
Commuter Railroads in Fiscal Year 2007:
[Refer to PDF for image: pie-chart]
Diseases of the musculoskeletal system and connective tissue: 45.9%;
Diseases of the circulatory system: 12.2%;
Mental disorders: 12.2%;
Neoplasms (growth of abnormal cells, tumor): 11.2%;
Diseases of the respiratory system: 6.1%;
Diseases of the nervous system and sense organs: 5.1%;
Other: 4.1%;
Diseases of the endocrine system: 3.1%.
Source: GAO analysis of RRB data.
Note: Percentages in the figure do not add up to 100 percent due to
rounding.
[End of figure]
We Did Not Analyze Data on LIRR Claimants‘ Jobs Due to Data
Limitations:
While RRB collects data on the jobs workers claim on their
applications, the data are not useful for analysis because job titles
are not standardized.
A single type of job can be listed many different ways, such as ’ticket
agent,“ ’ticket clerk,“ and ’ticket seller,“ that may not be easily
combined or compared without detailed knowledge of the jobs.
As a result, neither we nor RRB could perform analyses to detect
unusual patterns in commuter rail workers‘ applications, approval
rates, and impairments by job.
LIRR Workers Frequently Saw the Same Doctors:
We observed in our review of claims from LIRR and Metro-North Railroad
that most LIRR workers provided RRB with medical evidence from one of
three doctors. Our prior work has found that numerous claims with
evidence from the same doctors is an indicator of potential fraud or
abuse.[Footnote 19]
We did not observe these same patterns for workers from Metro-North
Railroad.
RRB does not maintain data for all railroads on claimants‘ doctors in a
format that would facilitate analysis and allow the agency to analyze
and detect unusual patterns. Currently, RRB only has information on
claimants‘ doctors in their paper claim files.
LIRR Workers Applied for Occupational Disability at a Younger Age Than
Workers From Other Commuter Railroads, and Most Were Receiving
Pensions:
LIRR claimants were a median age of 51 in fiscal year 2007, compared to
54 for the other commuter railroads.
RRB and rail management and labor officials told us that the LIRR‘s
closed pension plan”which allows workers to retire at age 50 with 20
years of service”was a factor in workers‘ decisions to apply for
occupational disability benefits because the benefits could supplement
their retirement income.
Of those who were asked when they applied for disability benefits, 100
percent of LIRR workers reported they were receiving a non-RRB pension,
compared to 64 percent of workers from the other commuter railroads.
[Footnote 20]
RRB Has Taken Some Steps to Improve the Use of Its Occupational
Disability Data, but Weaknesses Remain:
Until recently, RRB has not regularly analyzed occupational disability
data by railroad or performed other analyses that could enable it to
identify unusual patterns, such as inconsistencies in application and
approval rates, occupations, and types of impairments.
During the course of our review, RRB officials told us they are hiring
a new staff member who will be responsible for analyzing data to
identify trends or anomalies in the occupational disability program.
However, this effort might be hampered because RRB does not currently
maintain data, such as data on claimants‘ doctors and useful data on
the types of jobs rail workers held, in a format that can be easily
analyzed.
[End of Objective 1]
Objective 2: Identify the steps RRB has taken to ensure that only
eligible LIRR workers receive disability benefits:
RRB Implemented a Five-Point Plan in October 2008 to Enhance Oversight
of LIRR Claims:
RRB‘s five-point plan for LIRR workers is a departure from how the
agency handles claims for workers from all other railroads.
1. RRB is ordering its own medical exams for all LIRR claimants to
supplement medical evidence provided by claimants.
* Through the end of April 2009”6 months after the plan was implemented”
RRB had ordered 422 exams or tests for 104 claimants.
* RRB recently began ordering MRIs and CAT scans”diagnostic tools
previously not available to claims examiners”for certain LIRR claims,
where X-rays ordered by RRB conflicted with MRI reports provided by
workers‘ doctors.[Footnote 21]
2. RRB plans to conduct continuing disability reviews for all 362 LIRR
occupational disability annuitants who were age 54.5 and younger, as of
October 21, 2008.
* As of the end of April 2009, the agency had completed 74 continuing
disability reviews. Disability benefits were continued in 73 of these
cases, and in one case, RRB found the worker was deceased.
3. RRB has increased its oversight of its Westbury field office in Long
Island through biweekly phone calls and quarterly visits.
* The district manager has reported that the office is seeing fewer
occupational disability applications from LIRR workers.
4. RRB is separately collecting and plans to analyze data only for LIRR
claims to detect any unusual patterns, such as impairments and treating
physicians that appear more frequently.
* RRB is still collecting data, and officials reported that it is too
early to analyze it.
* Although they are not currently analyzing these data across the
program, RRB officials stated that they may expand these analyses to
other railroads, as necessary.
5. RRB has begun collecting data on the extent to which LIRR management
employees are accessing the program.[Footnote 22]
* RRB officials told us they could not use their existing occupational
data to determine how many LIRR managers had applied, so they collected
and analyzed data from LIRR on all managers who retired or left the
railroad after January 2000.
* Of the 401 managers who retired or left the railroad during this
period, 207 were receiving occupational disability benefits, as of the
end of September 2008. An additional 9 had applications pending.
Almost All LIRR Occupational Disability Applications Decided under the
Five-Point Plan Have Been Approved:
As of the end of April 2009:
* RRB had decided 66 LIRR workers‘ occupational disability claims.
Sixty-four were approved, and two were denied. Another claim was
withdrawn by the claimant.
* RRB reports that implementing the five-point plan has cost about
$248,000. Most of these costs are related to staff time for claims
examiners, which have already been budgeted for in RRB‘s disability
program operations.
RRB Has Taken Additional Steps to Oversee Its Occupational Disability
Program:
As mentioned previously, RRB recently approved hiring a new staff
member, who will report to the Director of Assessment and Training, to
analyze occupational disability program data.
RRB also is undergoing a reorganization to separate its sickness and
unemployment programs from its disability programs, in order to better
monitor the occupational disability program.
[End of Objective 2]
[End of section]
Enclosure II: Comments from the U.S. Railroad Retirement Board Chairman
and Labor Member:
United States Of America:
Railroad Retirement Board:
844 North Rush Street:
Chicago, Illinois 60611-2092:
July 24, 2009:
Daniel Bertoni:
Director:
Education, Workforce, and Income Security Issues:
United States Government Accountability Office:
Washington, DC 20548:
Dear Mr. Bertoni:
On behalf of the United States Railroad Retirement Board, we are
submitting the following comments on the proposed report titled
Railroad Retirement Board: Review of Commuter Railroad Occupational
Disability Claims Reveals Potential Program Vulnerabilities.
As you know, the Railroad Retirement Board is responsible for payment
of benefits to railroad employees and their families under the Railroad
Retirement Act and the Railroad Unemployment Insurance Act. As reported
in the Railroad Retirement Board's Annual Report for Fiscal Year 2008,
the Railroad Retirement Board paid benefits under the Railroad
Retirement Act to about 615,800 beneficiaries in fiscal year 2007 and
there were approximately 568,200 beneficiaries on the rolls at the end
of that fiscal year. During fiscal year 2007, benefits under the
Railroad Retirement Act totaled approximately $9.8 billion.
Among the benefits that the Railroad Retirement Board pays under the
Railroad Retirement Act is an occupational disability annuity. It is
this benefit that is the subject of your report. Your proposed report
states that in fiscal year 2007, the Railroad Retirement Board paid
occupational disability benefits to approximately 64,000 beneficiaries.
While this is true, a significant percentage of these beneficiaries
also meet the more rigid standard of total and permanent disability
under the Social Security Act. In fiscal year 2007, of the
approximately 64,000 occupational disability annuitants, all but
approximately 28,600 had been rated as meeting the total and permanent
disability standard under the Social Security Act.
Looking at this from a slightly different perspective, of the 568,200
railroad retirement beneficiaries on the rolls at the end of fiscal
year 2007, only 28,600 beneficiaries, or about 5 percent, were
receiving benefits based solely on meeting the occupational disability
standard. In recent years, approximately 70 percent of the individuals
awarded occupational disability annuities have also been rated totally
and permanently disabled. It is also important to note that even though
a portion of an occupational disability annuity may be funded by monies
transferred under the financial interchange between the railroad
retirement and social security systems, funds transferred from the
social security system under the financial interchange are only used to
pay benefits equal to what would be paid under the social security
system if there was no separate railroad retirement system.
The Railroad Retirement Act requires that the Railroad Retirement Board
work with railroad labor and railroad management in establishing
standards for adjudication of occupational disability. Working with
rail labor and rail management, the Railroad Retirement Board, in 1998,
adopted regulations and a claims manual that provide the standards. The
regulations called for creation of an occupational disability advisory
committee comprised of a physician representing rail labor and a
physician representing rail management. It is the responsibility of
this committee to periodically review the standards and claims manual
and recommend revisions in these documents.
When the Board became aware of the high incidence of occupational
disability claims filed by employees of the Long Island Rail Road, the
Board adopted a five-step plan to address possible issues concerning
the claims from Long Island Rail Road employees. This plan applies
additional scrutiny to the adjudication of occupational disability
annuity applications filed by Long Island Rail Road employees. The plan
calls for reviewing occupational disability claims to identify other
situations similar to the Long Island Rail Road and the Board will
apply additional scrutiny to any such situations that warrant such
scrutiny. In this same vein, the Board has created a new position to
provide quality control oversight to the occupational disability
program nationwide, not just to Long Island Rail Road applications.
This new position will be responsible for analysis of claims to
identify anomalies similar to the Long Island Rail Road situation.
While your report suggests that the Railroad Retirement Board may not
have sufficient information to detect such possible anomalies, the
newly created position will be authorized to develop new methods of
data collection needed to perform data mining and analysis of the
occupational disability annuity program.
The Board has taken action to address the anomaly of the high incidence
of occupational disability claims by employees of the Long Island Rail
Road. As indicated previously, those receiving benefits based solely on
meeting the occupational disability standard represent only 5 percent
of railroad retirement beneficiaries. Nevertheless, the Board takes its
administrative responsibilities for this program very seriously, and we
will continue to monitor this program and take corrective action as
necessary.
On behalf of the United States Railroad Retirement Board, we appreciate
the opportunity to comment on your proposed report.
Sincerely,
Signed by:
Michael S. Schwartz:
Chairman:
Signed by:
V.M. Speakman, Jr.
Labor Member:
cc:
Secretary to the Board:
Inspector General:
Director of Programs:
[End of section]
Enclosure III: Comments from the U.S. Railroad Retirement Board
Management Member:
United States Of America:
Railroad Retirement Board:
Jerome F. Kever:
Management Member:
844 North Rush Street:
Chicago, Illinois 60611-2092:
July 24, 2009:
Mr. Daniel Burton, Director:
Education, Workforce, and Income Security Issues:
United States General Accountability Office:
Washington, DC 20548:
Dear Mr. Burton:
On behalf of rail industry stockholders, I wish to thank you and your
team for bringing significant resources and expertise to bear in your
review of the Railroad Retirement Board's occupation disability program
as it relates to certain employees of commuter rail operations.
Without such comprehensive and independent reviews, it is possible for
inherent systemic weaknesses to impact both the occupational disability
and the disability freeze process as administered by the RIB. Until the
Board has reviewed the results of further independent inquiry, as a
fiduciary, I am uncomfortable relying on present outcomes as proof that
program integrity and quality assurance controls, including the five
point special review process developed to address the adjudication of
Long Island Railroad employees' applications, are sufficient to detect
and prevent program abuse.
I look forward to your further review, recommendations and findings.
Sincerely,
Signed by:
Jeremy F. Kever:
cc:
Secretary to the Board:
Inspector General:
Director of Programs:
[End of section]
Enclosure IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Daniel Bertoni, (202) 512-7215 or bertonid@gao.gov:
Staff Acknowledgments:
Jeremy Cox (Assistant Director) and Arthur T. Merriam Jr. (Analyst-in-
Charge) managed all aspects of the assignment. Rachael Valliere, Martin
Scire, and Jillian Fasching made significant contributions to this
report, in all aspects of the work. In addition, Gregory Wilmoth,
Gloria Hernandezsaunders, and Wilfred Holloway provided technical
support; Jessica Botsford provided legal support; and Susan Aschoff
assisted with the development of the message and report.
[End of section]
Footnotes:
[1] Workers also must have a "current connection" with the railroad
industry, which is generally met if the employee worked for a railroad
in at least 12 of the last 30 consecutive months immediately preceding
the start date for the disability annuity.
[2] The other commuter railroads included in this review are:
Massachusetts Bay Commuter Railroad, Metro-North Railroad, New Jersey
Transit, Northeast Illinois Commuter Railroad, Northern Indiana
Commuter Transportation District, Port Authority Trans-Hudson
Corporation, and Southeastern Pennsylvania Transportation Authority.
[3] We used calendar years 2004 through 2007 because 2004 was the
earliest year that RRB had complete data on commuter rail employees'
ages and years of service. Calendar year 2007 is the most recent year
for which RRB has complete railroad employment data.
[4] We chose fiscal year 2007 because it provided the most recent,
complete data on the final outcomes of occupational disability claims.
[5] The Metropolitan Transportation Authority is the parent company of
both the LIRR and Metro-North railroads.
[6] We selected Metro-North because it operates in a similar geographic
area and has a similar number of employees to LIRR.
[7] GAO, Supplemental Security Income: Additional Actions Needed to
Reduce Program Vulnerability to Fraud and Abuse [hyperlink,
http://www.gao.gov/products/GAO/HEHS-99-151] (Washington, D.C.: Sept.
15, 1999).
[8] The average annual occupational disability benefit was $26,556 in
fiscal year 2007.
[9] Amtrak is a commuter railroad, but we excluded it from our analysis
because of its size (in 2007, it had three times as many employees as
LIRR). It also operates and has employees across the nation, rather
than in a specific region like the commuter rail agencies. Further, we
excluded commuter employees of freight railroads because we had no way
to differentiate them from freight workers.
[10] We used calendar years 2004 through 2007 because 2004 was the
earliest year that RRB had complete data on commuter rail employees‘
ages and years of service. Calendar year 2007 is the most recent year
for which the RRB has complete railroad employment data.
[11] We chose fiscal year 2007 because it provided the most recent,
complete data on the final outcomes of occupational disability claims.
[12] The Metropolitan Transportation Authority is the parent company of
both the LIRR and Metro-North railroads.
[13] We selected Metro-North because it operates in a similar
geographic area and has a similar number of employees.
[14] RRB‘s disability programs fall under the Railroad Retirement Act.
[15] Workers also must have a ’current connection“ with the railroad
industry, which is generally met if the employee worked for a railroad
in at least 12 of the last 30 months immediately preceding the start
date for the disability annuity.
[16] RRB and SSA exchange funds to ensure the Social Security Trust
Funds are in the same position they would be if rail workers were
covered by Social Security instead of their own system. RRB sends SSA
tax revenues that SSA would otherwise collect from rail workers, and
SSA provides RRB the funds that SSA would otherwise pay railroad
workers in benefits. However, given declining rail employment, in
fiscal year 2007, RRB received about $1.2 billion more than it sent to
SSA for employee disability benefits.
[17] According to LIRR officials, fewer than 1,000 active LIRR
employees were covered under the closed pension plan, as of January
2009.
[18] We calculated approval rates based on those claims where this
determination had been made, as of May 2009.
[19] GAO, Supplemental Security Income: Additional Actions Needed to
Reduce Program Vulnerability to Fraud and Abuse, [hyperlink,
http://www.gao.gov/products/GAO/HEHS-99-151] (Washington, D.C.: Sept.
15, 1999).
[20] When workers apply for occupational disability benefits, RRB does
not always ask whether they were receiving or expected to receive a
railroad pension. The agency only asks this of applicants who have at
least 25 years of service at 65 years old or 30 years of service at age
60 and may qualify for an RRB supplemental annuity. The supplemental
annuity currently provides a maximum of $43 a month to career railroad
workers.
[21] RRB procedures for occupational disability state that claims
examiners cannot order these tests.
[22] While management workers are eligible to apply for occupational
disability in the same way that other workers are eligible to apply,
concerns were raised in the news reports about the high rate at which
LIRR management workers with less physically demanding jobs were
accessing the occupational disability program, in comparison to line
workers with more physically demanding jobs. RRB officials told us they
are collecting these data in response to these concerns.
[End of section]
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