New York doctor admits role in railroad retirement fraud

Reuters News
Posted: Jan 18, 2013 3:44 PM

By Chris Francescani

NEW YORK (Reuters) - A local doctor pleaded guilty on Friday to playing a key role in a so-called disability mill that allowed hundreds of Long Island Rail Road employees to retire early with increased payouts after he claimed they had been injured on the job, authorities said.

The scheme went on so long and was so widespread that three-quarters of all Long Island Rail Road employees who retired between 1995 and 2011 got disability benefits, compared with one-quarter of their counterparts at Metro-North Railroad, Manhattan U.S. Attorney Preet Bharara said in a statement.

Dr. Peter Ajemian, 63, of Syosset, an orthopedist, pleaded guilty to one count of wire fraud and mail fraud and a second count of health care fraud and faces up to 30 years in prison, according to federal prosecutors.

Ajemian also agreed to repay the government $116.5 million, roughly the amount of money disbursed for phony disability claims that prosecutors were able to trace to Ajemian's role in the conspiracy, court records show.

Prosecutors said between the late 1990s and 2008, Ajemian fraudulently declared that 734 LIRR employees had been injured on the job and were eligible for disability benefits.

That was 94 percent of all railroad employees he examined during that time period, according to Bharara.

In return for the phony diagnoses, Ajemian received between $800 and $1200 per patient as well as "millions of dollars in health insurance payments for unnecessary medical treatments and fees for preparing fraudulent medical support for the claimed disabilities," Bharara said.

Thirty-two people have been indicted - including a second doctor, 20 LIRR employees and several assistants - in the long-running scheme.

Twenty-one people - including Ajemian and three LIRR retirees who also pleaded guilty to fraud on Friday - have admitted their roles in what Bharara called a "massive fraud at the LIRR."

Ajemian, who is scheduled to be sentenced on May 24, declined to comment as he left court with his attorney, the Long Island newspaper Newsday reported on Friday.

(Reporting by Chris Francescani; Editing by Ellen Wulfhorst and Claudia Parsons)