CITY HALL — An ongoing fight over disability pension reforms for uniformed city workers has put a spotlight on the process that enables a huge percentage of retiring police officers and firefighters to claim such benefits.
“When you’ve got a system that has the mass majority of its members going out on disability, something is wrong,” Edmund McMahon of the fiscally conservative Empire Center for New York State Policy said. “It’s very high. So the question is: why is it so high?”
More than 75 percent of FDNY retirees and between 33 and 50 percent of NYPD retirees collect disability payouts. This is one of the reasons the city is resistant to a union-backed measure that would roll back recent changes made to disability retirement benefits.
Police and fire unions argue that the status quo is unfair to recent hires and that City Hall’s own solution is inadequate.
“We want to make sure there’s equality across the board and everyone is compensated fairly,” Sergeants Benevolent Association president Ed Mullins said.
WHAT’S BEHIND THE PENSION FIGHT
A change in state law reduced disability benefits for uniformed workers hired after 2009. Those hired before then and hurt on the job get pensions equal to 75 percent of their salaries plus Social Security benefits. The change lowered that payout to 50 percent for new hires, an amount that could be decreased even further by Social Security benefits.
State lawmakers must amend the law again and a change applying to just city workers would require approval from the Council in the form of a home rule message. The Council in June passed a plan backed by Mayor Bill de Blasio.
Under that proposal, those hired after 2009 would receive pensions of 50 percent of an average of their recent salaries or the maximum for workers in their union. If they are hurt while on the job, they would get pensions equal to 75 percent of their salary. De Blasio’s plan also removes a reduction related to Social Security.
“On the one hand you’ve got something that, a case can be made, is inadequate,” McMahon of the Empire Center said. “On the other hand, you’ve got something that is extremely expensive and, arguably, overused.”
HOW ELIGIBILITY IS DECIDED
Whether someone is eligible for disability is determined by individual pension systems, like the police and FDNY pension funds. Each has an independent medical board that gives recommendations reviewed by the pension fund’s board of trustees.
“The disability determination process involves several levels of review, including a full medical examination,” said Eric Sumberg, a spokesman for Comptroller Scott Stringer, the custodian and investment advisor to boards of the five pension funds.
“In the case of an Accident Disability Retirement, the burden of proof is on the member, with some exceptions, to show the applicable medical board that his or her incapacity is the result of an accident sustained in city service,” Sumberg said.
Board decisions can be appealed.
OVERSIGHT AND FRAUD
Employees aren’t routinely examined after disability is awarded, though each of the pension funds are regulated differently.
Certain disability beneficiaries can be brought in for a medical exam on a yearly basis under a safeguard provision.
Pension funds are responsible for monitoring statutory income limitations and employees must submit that information annually, according to de Blasio spokeswoman Amy Spitalnick.
“If there are allegations of or concern regarding fraud, there’s a statutory process to bring individuals back in for reexamination,” Spitalnick said.
Nicole Giambarrese, acting general counsel at the Police Pension Fund, declined to comment on whether the current process is sufficient for safeguarding against fraud. But she said that members have been brought before the medical board and brought back to duty in the past.
Calls to the FDNY pension fund were not returned. But Uniformed Firefighters Association president Stephen Cassidy, who is a member of the FDNY pension fund board of trustees, said he believed the current system was adequate.
“I’ve never heard anybody say that the system doesn’t work,” Cassidy said.
‘IT’S JUST UNFAIR’
One of the arguments against returning to pre-2009 benefits is that the city would be taking on enormous pension costs.
City Hall said the plan backed by the unions (as well as Gov. Andrew Cuomo) would cost $6 billion over the next three decades while de Blasio’s proposal would cost between $1.2 and $2 billion.
The unions and their advocates say that the city’s estimate of their plan factors in the disproportionate amount of police and fire workers who began collecting disability after the Sept. 11 attacks.
“You can’t look at that as a honest evaluation of what the future numbers would be,” Sen. Diane Savino (D-Staten Island/Brooklyn) said. “It’s just unfair.”
But McMahon, citing a review of statewide figures, said that the numbers of police and fire department members retiring on disability have been disproportionately higher than other New York municipality even before 9/11.
“You can’t tell me that buildings in New York City are more flammable,” he said.
In January 2014, eight Staten Islanders were among scores of retired New York City police officers, firefighters and prison guards who were charged Manhattan D.A. Cyrus R. Vance Jr. with faking psychiatric problems in order to get federal disability benefits.
Some falsely claimed that their conditions arose after the Sept. 11 attacks, Vance said.
MORE OVERSIGHT NEEDED?
Maria Doulis from the nonpartisan Citizens Budget Commission said that the city’s higher payouts — at least for for those hired before 2009 — might create too much of an incentive for police and firefighters to try to retire on disability.
“It might make sense to have more explicit standards and oversight,” Doulis said. “It might be a good time to step back and say, let’s think about how we do this.”
Any changes to the system regulating the city’s pensions would require state action.
A sweeping inquiry revealed fraud in federal disability among retired Long Island Rail Road employees seven years ago.
Union leaders and backers of their plan acknowledge that such wrongdoing is possible on a smaller scale in the city. But they said that any fraud is likely minimal and this small chance shouldn’t affect pension reform.
“We can’t punish the people who make the sacrifice and are legit and just paint everybody with the same brush,” Mullins said.
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