March 6, 2007

Govt Pensions: Legalized Fraud

Is anyone surprised by this article at all. No. Politicians are only beholden to public employee unions. And all "public safety" employees are "heroes" as soon as they walk in the door, so they cannot ever be told no. Even if Grandma has to go to the poor house due to her county tax bill the "darlings" of the pensions system cannot be denied. LAAG needs to hand out some bright green ribbon magnets (like those yellow ones for the troops and the pink ones for breast cancer; I dont think green is taken) that say "I DONT support pension scammers"

County pension artists
L.A. safety employees drawing new attention

LA Daily News
Article Last Updated: 03/05/2007

Los Angeles County sheriff's deputies and firefighters retire on disability pensions at a nearly 50 percent higher rate than their counterparts in 19 other California counties, according to a report released Monday.

The 73-page report by Buck Consultants comes more than two years after the Board of Supervisors ordered an investigation into whether employees were fraudulently obtaining lucrative disability pensions.

The supervisors ordered the investigation after the Daily News revealed that an average of 79 percent of firefighters and 56 percent of sheriff's deputies received job-related disability retirements in the decade prior to 2005.

"There really is a culture of maximizing benefits," county Risk Manager Rocky Armfield said. "And the employees are very good at it."

As part of the investigation, the supervisors asked the firm to analyze 35 cases to determine whether any were fraudulent. The firm found no cases of outright fraud - defined as deliberate attempts to qualify for benefits that cannot be supported by doctors.

But investigators found four disability pensions whose justifications, they said, "contradicted" the original intent of a law granting disability pensions.

Buck Consultants said case law concerning disability pensions has gradually allowed more employees to qualify than was originally intended by a 1937 law that still governs pensions. The law was designed to allow incapacitated public employees to be replaced by capable employees.

In two of the cases reviewed by Buck, the connection between the injury and the job was minimal, analysts said.

Another case involved an employee who not only received a disability retirement at an advanced age, but whose main reason for the disability was the "aging process," investigators said. Very little of the disability was work-related.

In the fourth case, a firefighter who retired on a disability pension started a new job within days of leaving the department.

"It seems to us that the level of sophistication is higher in Los Angeles County regarding how to scam the system," said Jon Coupal, president of the Howard Jarvis Taxpayers Association. "I think it's probably not surprising when you have an entrenched bureaucracy like this with union leadership who encourage this kind of activity."

Employees savvy

Armfield said safety employees are well aware of the advantages of obtaining job-related disability pensions, half of which are tax-free. The job-related disability pays a minimum of 50 percent of an employee's compensation, while a non-job-related disability pays about 33 percent.

And when the employee dies, the spouse receives 100 percent of the final pay, instead of 65 percent.

"So you can easily see why it would be economically wise for safety members to at least apply," Armfield said. "There is no illegal activity in applying. They are simply seeing if they will be granted the disability, and if they are, there is a tremendous upside economically."

Also, Armfield said an "informal infrastructure" has developed over the years involving law firms, doctors and employee unions that assist safety employees late in their careers in applying for disability pensions.

The report found that as of June 2004, 61 percent of county safety employees retired on job-related disability pensions. In the 19 other counties, the percentage was 33 percent.

Standard liberal

The report also found that the Los Angeles County Employees Retirement Association applied a more liberal standard in deciding when to grant disability pensions, approving job-related disability pensions for 53 percent of applicants in 2003-04, compared with 18 percent in 15 other counties.

Among the 35 disability pension cases reviewed, the investigators found four filed after the applicant turned 60, and 11 filed within 90 days of retirement, suggesting that the employees were timing their applications to coincide with their normal retirement dates.

On the bright side, the report found a large number of employees who had filed workers' compensation claims were persuaded to come back to work on light duty. As a result, the costs associated with employees who file claims shortly before retirement have dropped from $49 million in 2003 to $37 million in 2005.

Still, investigators found a common practice among county employees approaching retirement of "spiking" their final pay with unused vacation, sick leave and other one-time payments.

Investigators said it is not difficult to get injury claims approved, citing examples of workers injured by tripping over a file cabinet, bending under a desk, lifting a ladder and falling off a bicycle while off-duty.

"The disability threshold is very, very low," Armfield said. "It's diminutive to the point if you apply with any good justifiable medical reason allowed under the act, there is a good chance you'll get it."

To help reduce soaring pension costs, Buck Consulting recommended legislative changes to reform the 1937 law back to its original intent and encouraged the sheriff and county Fire Department officials to return more injured employees to work in light-duty jobs.

But investigators wrote in the report that reducing the number of disability pensions will be challenging when many safety employees possess "extensive knowledge and understanding" and a "well-established external support network" to help them file for disability pensions.

It will be difficult to reform the 1937 law, wrote county Chief Administrative Officer David Janssen, noting that legislation passed last year will further increase the number of disability pension applications. That law enables safety employees to receive a 100 percent disability pension even though factors unrelated to work caused a significant portion of their permanent injuries, Janssen wrote.

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