Disability Doctor’s Office Manager Sentenced In Manhattan Federal Court For Obstructing The Investigation Of The Lirr Fraud Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, announced today that MARIA RUSIN, the office manager for disability doctor Peter J. Ajemian, was sentenced today in Manhattan federal court to three years of probation, including six months of home detention, for obstructing the investigation of the alleged massive fraud scheme in which Long Island Railroad (“LIRR”) workers claimed to be disabled upon early retirement so that they could receive disability benefits to which they were not entitled. RUSIN pled guilty in January 2013 to one count of obstructing a health care fraud investigation before U.S. Magistrate Judge Henry Pitman. She was sentenced by U.S. District Judge Victor Marrero.

Manhattan U.S. Attorney Preet Bharara stated: “As Dr. Peter J. Ajemian’s office manager, Maria Rusin understood the office process through which the LIRR disability fraud scheme was carried out, but when questioned by criminal investigators about her knowledge of the scheme, she denied any and told one lie after another. Obstructing the Government’s search for the truth is a serious crime, and as Rusin now knows, it is one that carries consequences.”

According to the Complaint, the Superseding Indictments, the Superseding Informations, and statements made in other public filings and in court:

The Railroad Retirement Board (“RRB”) is an independent U.S. agency that administers benefit programs, including disability benefits, for the nation’s railroad workers and their families. A unique LIRR contract allowed employees to retire at the relatively young age of 50 – the age of eligibility has since changed to 55 – if they had been employed by the LIRR for at least 20 years. Eligible employees are entitled to receive an LIRR pension, which is a portion of the full retirement payment for which they are eligible at 65. In addition, at full retirement age (between age 60 and age 65 depending on years of service) they are eligible to receive an RRB retirement pension. For LIRR workers who retired at 50 with only an LIRR pension, they would receive less than their prior salary and substantially lower pension payments than those to which they would be entitled at full retirement age. However, LIRR employees who retired and claimed disability could receive a disability payment from the RRB on top of their LIRR pension, regardless of age. A retiree’s LIRR pension, in combination with RRB disability payments, can be roughly equivalent to the base salary earned during his or her career.

Hundreds of LIRR employees have allegedly exploited the overlap between the LIRR pension and the RRB disability program by pre-planning the date on which they would falsely declare themselves disabled so that it would coincide with their projected retirement date. These false statements, made under penalty of prosecution in disability applications, allowed LIRR employees to retire as early as age 50 with an LIRR pension, supplemented by the fraudulently obtained RRB disability annuity. From 1995 through 2011, more than 75% of LIRR employees stopped working and began receiving RRB disability benefits, whereas during this same period, only 25% of retiring Metro-North employees stopped working and began receiving RRB disability benefits.

RUSIN was the office manager for Peter J. Ajemian, a Board-certified orthopedist who was instrumental in helping LIRR retirees receive disability benefits to which they were not entitled. Between the late 1990s and 2008, Ajemian declared as disabled over 94% of the LIRR employees he saw as patients. As part of the massive fraud scheme, Ajemian prepared false documentation purporting to show the LIRR employees’ steady decline toward disability exactly at the time they pre-planned their retirement. He then provided to those LIRR employees a narrative for submission to the RRB that claimed they should receive a disability annuity. These medical narratives were completely fabricated or grossly exaggerated so that Ajemian could recommend a set of restrictions that, if legitimate, would render it impossible for the LIRR employees to continue performing their jobs. Many of the purportedly “objective” findings from the tests he conducted showed nothing more than normal degenerative changes one would expect to see in patients within the relevant age bracket. In his plea agreement, Ajemian stipulated that the total intended losses from his fraud were between $100 and $200 million, and that the actual losses suffered by victims to date total $116.5 million.

On August 30, 2010, in an interview with criminal investigators participating in the Southern District of New York’s investigation of this disability fraud scheme, RUSIN falsely denied knowing that Ajemian’s LIRR patients were retiring at the same time that they were claiming occupational disability from the RRB; falsely claimed that she was never told that an LIRR patient was planning to retire except when the patient was directed to see her to pay for a narrative; falsely claimed that this notice of an LIRR’s patient’s planned retirement usually occurred at the end of the process of seeing Ajemian; and falsely claimed that she had no understanding about how an occupational disability would affect the payout for a worker who was retiring. In fact, RUSIN had day-to-day exposure to Ajemian’s disability practice, and she fully understood how the process worked and what the financial incentives were for the LIRR employees.

In addition to her term of probation, RUSIN, 57, of Farmingdale, New York was also ordered to pay a $3,000 fine and a $100 special assessment.

Thirty-two people have been charged in connection with the LIRR disability fraud scheme, 23 of whom have now pled guilty. Two defendants have been sentenced. Peter J. Ajemian was sentenced in May 2013 to 96 months in prison and ordered to forfeit $116,500,000. Gary Satin was sentenced in March 2013 to 20 months in prison and ordered to forfeit $247,000. The charges against the remaining defendants are merely allegations and they are all presumed innocent unless and until proven guilty.

Mr. Bharara praised the Railroad Retirement Board Office of Inspector General, the Federal Bureau of Investigation, and the Office of the Inspector General of the Metropolitan Transportation Authority for their outstanding work in the investigation, which he noted is ongoing. He also acknowledged the previous investigation conducted by the New York State Attorney General’s Office into these pension fraud issues.

The Office’s Complex Frauds Unit is handling the case. Assistant U.S. Attorneys Justin Weddle, Daniel Tehrani, and Nicole Friedlander are in charge of the prosecution.