Whistleblower Trial: A Corrupt Disability Pension System

A state whistleblower and former Connecticut pension systems lawyer filed a lawsuit of corruption and embezzlement in the handling of millions of dollars in disability pension benefits.

The lawsuit, filed by Virginia Brown of Avon, expands on concerns raised by state auditors last week and alleges mismanagement has put state pension systems at risk of losing the protection of the law. federal tax.

Comptroller Kevin P. Lembo, one of the main defendants, responded on Friday that the trial focuses on practices that predate his administration and that were already under review. These reforms, however, require complex negotiations between the state and state employee unions, and do not come quickly, he said.

The lawsuit, which was filed in Superior Court and was withdrawn at the defendants’ request to the United States District Court, names Lembo, Assistant Comptroller Martha Carlson, two other senior officials in the Comptroller’s Office, the Commission government employee pension plan and Linda Yelmini. , former head of the National Office for Industrial Relations, as defendants.

Brown, who was hired by Lembo in September 2012 and assigned to pension services, says officials “knowingly and willfully applied the wrong legal standard and granted” excessive pension disability benefits – sometimes to ineligible individuals – “for purely political reasons”.

These reasons, the lawsuit alleges, include favor from the state employee unions who supported Lembo’s election.

Avon’s attorney, who filed a whistleblower complaint with auditors Robert M. Ward and John C. Geragosian two years ago, also alleged that Lembo and her senior associates regularly pressured her to covered up these issues and retaliated against her for reporting them.

She seeks compensatory and economic damages for loss of compensation, emotional and physical distress and damage to her reputation.

Michael Rose, an attorney for the State Retirement Commission and Yelmini, said he would file a motion to remove his clients from the lawsuit. Attorney General George Jepsen, whose office represents Lembo and the other defendants, declined to comment.

Brown also alleged in his lawsuit that:

• Carlson and Lembo pleaded for some candidates to “receive favorable treatment”.
• Lembo improperly provided an “backdated disability pension” to a retiree, resulting in $ 198,000 in badly paid retroactive benefits.
• The pension commission approved disability benefits for 14 former municipal workers deemed ineligible by the state medical examination board at the instigation of Lembo, Carlson and Yelmini.
• The Comptroller’s Office dismissed an investigator in 2012 for initiating a review of allegations that 40 East Haven municipal retirees were improperly receiving disability benefits while in paid employment.
• Officials did not enforce the federal dollar limit on maximum benefits per year for state employees who retired before 2011.
• Ignored a recommendation from the special advocate to disclose errors and file corrective information with the Internal Revenue Service. The special advocate subsequently resigned.

“This conduct… continues to cause substantial harm to the state of Connecticut and its taxpayers by adversely affecting the financial stability of the state and pension systems,” Brown wrote.

“This is another example of a whistleblower speaking out as part of her civic duty to expose things that she believes to be wrong at great risk to herself, both personally and professionally,” said Brown’s lawyer in Hartford, Todd Steigman, wrote in a statement released Friday. “Without strong whistleblower protection laws and vigorous enforcement of whistleblower retaliation laws, employees like Virginia will be less likely to come forward and the public will suffer in the long run.”

“There really isn’t much new here,” Lembo told the Mirror on Friday, noting that several of Brown’s concerns have not only been raised in the media in recent years, but have also been raised by the Controller. himself.

“Not a drop of ink would have been written about these issues if I had not discovered, highlighted and taken action to end them,” said Lembo, who took office in January 2011. Lembo succeeded former comptroller Nancy Wyman, who was elected lieutenant governor in 2010 and again in 2014.

For example, Lembo said he has ended disability pension cases in which the state unduly pays more than a federal cap. Public sector unions then challenged these actions and legal battles continue to be fought.

“The reality is that we are working on each of these issues before the applicant comes to work here,” he said.

Lembo added that he could not comment on specific allegations in the context of an ongoing litigation. But he rejected any notion of coercion, retaliation or favoritism – political or otherwise – in his office.

“I absolutely reject any claim that decisions or actions have been taken in favor of one group or another,” he said.

Brown’s lawsuit expands on a controversy Ward and Geragosian described last week in a special report to Governor Dannel P. Malloy.

Auditors warned the governor of “a potential breach of custody” of state retirement disability programs centered on a key legal definition.

Under the Main Retirement Program for State Employees and a Municipal Workers Plan administered by the Comptroller’s Office, workers with disabilities are expected to undergo a medical examination within 24 months of receiving benefits from disability.

They cannot continue to collect disability benefits, auditors say, if a team of state-appointed doctors determine they could return to that job or to an “appropriate and comparable” position.

Lembo noted last week that he wrote on May 18 of this year to the Labor Relations Office – the main labor relations agency for the executive branch – and the Coalition of Employee Bargaining Agents of the State, urging them to immediately begin negotiations to resolve any disagreement over the “appropriate and comparable” standard for testing disability benefit eligibility.

Lembo’s letter was dated three days after he was served with Brown’s trial.

Brown says she first complained to Lembo and others in October 2012 that this standard was not being enforced. Workers were allowed to keep their disability award as long as their injury prevented them from returning to their original jobs.

Brown wrote that she had shown that a “significant number” of retirees were receiving disability benefits while holding paid employment in comparable positions.

Lembo said last week that he suspended all 24-month exams at the end of 2012 to try to develop a revised definition of “appropriate and comparable” occupations. This meant that all disabled retirees continued to receive benefits, even after 24 months, without a medical examination.

But Brown alleges that, at the same time, Lembo and other defendants repeatedly forced her to change her legal mind “to support the inappropriate administration and cover up their corruption.”

In late September and early October 2013, the state allowed the medical examination board to meet twice, but the lawsuit said Brown was prohibited from attending or having other contact with the board, “despite repeated requests for advice from the MEB “.

The medical board terminated disability benefits for a significant number of retirees at those meetings, auditors said. But Brown added in his lawsuit that Lembo’s office later said it failed to notify affected retirees prior to the meeting.

That meant the retirees’ cases would have to be reconsidered and that another board meeting was not scheduled, the lawsuit says.

And on October 30, 2014, Lembo and Carlson informed staff that the 24-month medical exams would again be suspended.

Brown also argued that the state’s failure to comply with the federal Internal Revenue Code could result in the loss of the “qualified” status of Connecticut pension plans. Among the tax benefits that go along with this, employer contributions to the plan are tax exempt.

The defendants have ignored warnings about this from a nationally recognized law firm specializing in government pension plans, Ice Miller LLP, the lawsuit says.

Indianapolis-based company advised commission to “make a voluntary correction filing” and inform the IRS that it had paid disability benefits to certain state retirees in excess of annual federal limits , indicates the trial.

Brown added that Ice Miller threatened on September 6, 2013 to resign unless the state followed his recommendations, and he quit working for the state later that month.

According to the lawsuit, Brown then brought these issues to auditors under the state’s “whistleblower” law.

Brown was transferred to another state agency last November, according to the lawsuit. According to the website of the Freedom of Information Commission, she now serves as an advisor.

Assistant Controller Natalie Braswell and Director of the Pension Services Division Brenda Halpin were also named as defendants in the lawsuit.

Mark Pazniokas contributed to this story.