Disability Fraud at the LIRR

Lirr_logo_2 Here is a disturbing report from the New York Times yesterday concerning the awarding of disability benefits to former workers at the Long Island Rail Road:

During the workweek, it is not uncommon to find retired L.I.R.R. employees, sometimes dozens of them, golfing there. A few even walk the course. Yet this is not your typical retiree outing.

These golfers are considered disabled. At an age when most people still work, they get a pension and tens of thousands of dollars in annual disability payments — a sum roughly equal to the base salary of their old jobs. Even the golf is free, courtesy of New York State taxpayers.

With incentives like these, occupational disabilities at the L.I.R.R. have become a full-blown epidemic.

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Wall Street Collapse = ERISA Stock Drop Litigation

Graphup Not a surprising development at all. From BNA Daily Labor Report (subscription required):

As several heavy hitters in the financial world have come under pressure or have gone bankrupt in the past couple of months because of the subprime mortgage and lending crisis that has battered investment firms and banks, the employer “stock drop” cases that proliferated in the post-Enron Corp. and post-WorldCom Inc. age are on the rise.

Although the Employee Retirement Income Security Act claims raised in these stock drop cases have not been identical, there are two central claims that arise in these cases. The first claim typically raised is that the plan fiduciaries breached their duties by offering company stock as a plan investment option when the stock was an imprudent or unwise investment. The second claim focuses on the disclosure obligations of the plan fiduciaries and often alleges that the fiduciaries breached their duties by not telling plan participants of financial matters of the plan sponsor that made the sponsor’s stock an imprudent investment.

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Protecting Workers in a Federal System

Paul Secunda has a new pair of working papers on SSRN, entitled “The Ironic Necessity for State Protection of Workers” and “More of Less: The Limits of Minimalism and Self-Regulation.”  These are his opening and closing statements in a debate with Jeffrey Hirsch for PENNumbra.  Paul takes the position that the federal government is doing a poor job of protecting American workers, noting a lack of capacity or will to engage in robust enforcement of statutes likes the National Labor Relations Act and the Occupational Safety and Health Act.  As a result, he would like to see states play a more active role in workplace regulation. 

These short papers touch on an important, longstanding debate in federalism theory: whether each field of social regulation ought to be handled exclusively at a particular level of government (federal, state, or local), or whether shared responsibilities ought to be the norm.  The exclusivity model was dominant through much of this nation’s history, but was almost entirely supplanted in the middle decades of the last century by a cooperative federalism model.  As someone who worries a lot about transparency and accountability in government, I confess to some unease about the opaque, complex federal-state-local arrangements that now predominate in nearly every major field of public policy (environmental protection, crime, health care, education, housing, transportation, etc.).  On the other hand, if the mechanisms of democratic accountability do not operate well, the exclusivity model can lend itself to agency capture, bureaucratic inertia, and regulatory stagnation–which is (I take it) how Paul would characterize the present state of federal labor and employment law.

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