Disgraced public workers cash in on Ohio's pension system

It happens again and again: A public worker gets in trouble then wins a disability retirement.

For six months, Dayton Daily News reporters investigated abuse of disability pensions in Ohio’s public pension system. We uncovered a system so lax that people who commit crimes while in office can leave with generous pensions.

Ohio’s multibillion dollar public employee pension system is so open to abuse it has allowed people to retire on lucrative disability pensions after committing crimes in office and while being terminated for misconduct on the job.

One former Dayton police officer, Phillip E. Brooks Sr., 45, collected his disability check while sitting in jail after being convicted of felony theft in office.

“Brooks is the poster child for pension reform,” said Randy Beane, president of Dayton’s Fraternal Order of Police John C. Post Lodge 44. “When we see that it makes all of us sick.”

A six-month Dayton Daily News examination found large percentages of employees in some local jurisdictions retired on disability, including nearly half of Dayton police officers and firefighters who retired between 2000 and 2010, and nearly 33 percent of Montgomery County sheriff’s deputies.

The high rates of disability retirement and prevalence of those retirements among employees who got in trouble at work raise the question of whether all of the workers receiving disability pensions are truly disabled.

The Daily News examination found nearly 35 percent of retirees in the Ohio Police & Fire Pension Fund (OP&F) retired on disability, the highest of Ohio’s five public pension systems.

“We’ve had cases where people are doing their full job, 100 percent of their job every single day and they walk in and resign on a full disability the next day,” said Brent McKenzie, Dayton’s acting director of human resources.

In a study of area municipalities, Huber Heights stood out. Of the 18 Huber Heights employees who retired between 2007 and 2010, 14 received disability awards, nearly 78 percent. Of police and firefighters, 10 of 11 retirees received disability pensions, a rate of 91 percent.

“I think people would be shocked to find out what people’s disabilities are for,” said Wanda Smith, retired Dayton assistant police chief. “I can tell you we’ve had people claiming injuries of their toe or their elbow or their hand — things people don’t perceive to be life-changing injuries.”

Public records do not reveal the reason a public employee receives a disability, so determining whether it is legitimate or not is virtually impossible. Annual pension costs topped $1 billion in 2010 for the more than 40,000 former public employees who are on disability for on- or off-duty injuries and illnesses. That figure represents nearly 12 percent of all retirees in Ohio’s public system.

Pension officials defend the disability system. Each of the funds adheres to state law, they say, and the pension boards put applicants through layers of independent medical testing and review before disability pensions are granted.

“I guess my gut reaction would be I think we’ve put a system in place where if (fraud) were a potential, we’ve minimized it,” said Ken Thomas, board chairman of the Ohio Public Employees Retirement System and safety administrator for the city of Dayton.

“Have we totally shut it down? Probably not.”

The Daily News’ examination found numerous examples of people taking new and sometimes demanding jobs while collecting disability pensions. When Dayton police Officer Keith Krynzel, 38, was fired in 2005 for engaging in sexual activity in his police cruiser, he received a partial disability pension from OP&F. Krynzel is now an electrician, according to his Facebook site, and he has competed in national contests that involve installing electrical units while wearing a tool belt.

Trouble at work

The Daily News’ investigation found more than a dozen cases of disability awards to public employees who were in disciplinary trouble at work or facing criminal charges. Among them:

• OP&F awarded a disability pension to former Huber Heights police Officer William M. Welch Jr., 35, after he was fired in 2008 for shoplifting from Walmart. Employees at the store suspected Welch stole items on as many as nine occasions, and he later pleaded guilty to a misdemeanor theft charge, according to his personnel file.

• In April 2010, former Montgomery County sheriff’s Sgt. Mike Pizzo, 44, pleaded guilty to engaging in sexual activity with an underage boy he met through Craigslist. That same month, he was awarded a disability pension from OPERS. He later withdrew his guilty plea.

• Huber Heights dispatcher Christie Waddell was fired in 2001 after a long history of disciplinary problems at work, including failure to report for duty. More than two years later, she received a disability pension from OPERS retroactive to when she was fired.

• Brooks retired in 2009 on disability from OP&F in the midst of an internal affairs investigation into allegations he used a police database to illegally obtain impounded cars he later sold. Brooks pleaded guilty to nine felony counts, including theft in office.

• In May, former Montgomery County sheriff’s Sgt. Shawn Baab notified the sheriff’s office that OPERS approved his disability application after he was fired March 1 for improper conduct and misleading an internal investigator. Baab, 40, was accused of sending an “inappropriate text message” that contained a photograph of a penis to a subordinate, according to an internal disciplinary report.

Baab, Welch and Waddell said their disability claims are valid. Pizzo and Brooks declined comment, while Krynzel could not be reached for comment.

Baab said via email that his disability is “due to an officer-involved shooting that I was involved in” and that he hopes to return to his job. His personnel file shows he was cleared for work by a psychologist eight days after he shot to death a man in a van who rammed Baab’s vehicle and injured him as Baab attempted to stop the van in Harrison Twp. on June 13, 2005.

The examples don’t sit well with area law enforcement.

“It’s insulting to me,” said Dayton police Chief Richard Biehl. “I’m sure you’ve heard of situations where someone all of a sudden is in a disciplinary pickle and the next thing you know they’ve got a disability pension.”

Added Sgt. Rob Rike, a supervisor in Biehl’s internal affairs division: “We have guys here who have been shot and in bad accidents. They are still here.”

State Sen. Tim Grendell, R-Chesterland, and state Rep. Lynn Wachtmann, R-Napoleon, are helping lead efforts in the legislature to overhaul the state’s pension systems. Both say the disability system needs to be part of that reform.

“The disability pension program shouldn’t be a golden parachute for public employees who commit misconduct,” Grendell said.

Special rules for police and firefighters

Ohio’s pension funds provide retirement benefits and health care to state and local government workers, legislators, educators and other school employees, law enforcement, firefighters and other nonfederal public employees. Reform proponents say changes are needed to ensure the long-term financial solvency of the pension systems that cover about 1.6 million active and inactive members, retirees and their dependents.

The bulk of the problems with the disability system identified by the Daily News center on the OP&F and the OPERS law enforcement division, both of which have high disability rates and whose members are treated differently from those in other pension systems, including the much larger OPERS general division. Law enforcement officers, firefighters and paramedics can retire on regular service pensions as early as age 48 with 25 years of service. State law also allows them to receive a more lucrative on-duty disability pension, rather than an off-duty one, if they develop cardiovascular or lung diseases during their career, regardless of whether they smoke, eat badly or don’t exercise.

The Internal Revenue Service also treats public safety workers differently. On-duty disability awards of up to 60 percent of final average pay are exempt from federal income taxes only for public safety workers, according to IRS rules.

William Estabrook, the former Dayton city manager who is executive director of OP&F, said those who work in public safety deserve different pension rules because of the nature of their jobs. And it clearly can be dangerous work. Just last month, Warren County sheriff’s Sgt. Brian Dulle, 36, was killed while trying to stop a fleeing suspect. On New Year’s Day, Clark County Deputy Suzanne Waughtel Hopper was shot and killed and German Twp. police Officer Jeremy Blum was wounded after each responded to a report of shots fired at Enon Beach Recreational Park.

An average of 16,000 sworn U.S. law enforcement officers are injured per year, according to FBI data. Roughly 163 officers have been killed annually in the line of duty in the last 10 years, data from the National Law Enforcement Officers Memorial Fund shows.

An estimated 81,000 firefighter injuries occur annually, according to the U.S. Fire Administration. About 38 percent of those injuries result in lost work time, the agency reported. An average of about 107 firefighters were killed in the line of duty in each of the last 10 years.

Montgomery County Sheriff Phil Plummer said the stress and danger inherent in the job don’t excuse abuses of the disability system.

Biehl agreed. “For those people who are truly disabled then there should be a way to take care of them,” said Biehl, who has worked in law enforcement for 27 years. “The fact is you have employees that spend their entire career serving a community and their livelihood, their subsequent pension, is potentially impacted by those who may not be deserving of those disability pensions.”

Most former public employees contacted by the Daily News did not volunteer information about their disabilities. An exception was former Montgomery County sheriff’s deputy Paul Hyatt, 48, who resigned in 2003 amid allegations he had an improper sexual relationship with a female inmate. Hyatt said he sought a disability retirement because of stress.

“I didn’t do anything criminal,” Hyatt said. “Supposedly, they said I had sex with a girl in jail, but they had nothing on me ... .”

Hyatt said he is unemployed and can’t live on his pension.

“The job I loved so much they took away,” he said.

Expensive system

Nearly a quarter of the OP&F fund’s annual pension cost — not including health care — is for disability retirees. It is the highest percentage among the five pension systems, though OP&F is the second smallest of the state’s five systems. OP&F retirees make up about 5 percent of Ohio public employee retirees, but the fund’s $211 million in annual disability pension payments account for more than 20 percent of the cost of all public employee disability pensions in Ohio.

Estabrook believes disability pensions do not act as a drain on the pension system because fund actuaries have accurately planned for a certain number of disability retirements. Also, he said, the bulk of retirees’ benefits are covered by fund investments rather than contributions from employers and employees.

State Sen. Keith Faber, R-Celina, scoffs at that argument. “The fact that you are budgeting with that kind of assumption doesn’t necessarily mean it’s OK,” Faber said. “It is clear that their plan is not short-term or long-term actuarially sound, particularly when you figure in health care costs.”

Actuaries estimate the pension system’s future costs based on assumptions about investment returns, inflation and retiree demographics. The OP&F fund is out of compliance with state rules requiring that the pension fund be able to cover all its obligations within 30 years. An OP&F proposal in 2009 to require a larger annual contribution from employers, and thus taxpayers, was dropped after legislators denounced it.

Taxpayers will be asked to bail out any of the state’s public pension systems if they do not resolve long-term funding issues associated with retirees living longer and escalating health care costs, said Aristotle Hutras, director of the Ohio Retirement Study Council, which oversees the pension funds for the Ohio legislature.

Estabrook said abuse of the system is rare because medical and vocational experts review each case before the board acts.

“In order for a person to be a malingerer, that means they have fooled eight to 10 qualified medical (and other) examiners. It’s sort of hard to do,” he said. “These are guys that are experienced. They have lots of signs that they watch for and lots of reactions and eye movements and head movements and body language.”

Dr. Manuel Tzagournis, medical adviser for OP&F’s disability evaluation panel, said mental problems, back trouble and other musculoskeletal issues are the hardest ailments to nail down. Even so, he said it is rare for someone to successfully fake disability because there are several medical experts involved in the review.

“If there’s an inconsistency, they don’t get the disability grant recommendation,” Tzagournis said.

Rejection rates show wide disparity

A Daily News review found a wide disparity in rejection rates from the different funds. Last year, 6.1 percent of disability applicants were rejected by OP&F, while OPERS denied about 9 percent, and the Highway Patrol Retirement System denied none, though that board acted on only four applications. Denial rates were higher for the State Teachers Retirement System (STRS), which rejected 18 percent of applications in the fiscal year ending June 30, 2010, and the School Employees Retirement System (SERS), which turned down 16 percent in 2010.

SERS and STRS employees must work five years to be eligible for disability. OPERS and OP&F require five years of work for off-duty disability awards, with immediate eligibility for on-duty disability pensions. The patrol fund sets no limits.

Rejected applicants can appeal, quit their job or return to work. Those who are eligible for a regular service pension can retire.

Ohio public employees who retire on disability typically receive more generous benefits than private sector workers, the bulk of whom must turn to the Social Security system for disability benefits.

Public retirees also may get less scrutiny. The federal government requires Social Security retirees to be totally disabled, rarely lets them work while collecting disability and refers reports of fraud to the Office of the Inspector General for investigation, said Doug Nguyen, deputy regional communications director.

The 23 percent of retired American workers on Social Security disability — 7.8 million people in 2009 — received an annual average benefit of $12,816. By comparison, the average disability pension for Ohio public employees in 2010 ranged from $15,096 for members of SERS to $34,207 for retired firefighters in the OP&F fund.

Wage and benefit comparisons have drawn criticism from public employees, who say there aren’t comparable jobs in the private sector. In addition, Ohio public employees do not receive Social Security benefits unless they’ve paid into the system while holding a private sector job.

OPERS spokeswoman Julie Graham-Price said the fund conducts investigations on a random sample of disability retirees. Since 1995, OPERS has terminated 947 disability awards, she said.

OP&F has no investigatory arm to look into allegations of fraud, nor does Estabrook think one is needed. The fund has terminated disability benefits for 27 retirees since 1995.

The highway patrol system’s termination details are sparse, but show just eight troopers on disability were returned to work since 1944, and four of them requested it, said Dan Weiss, executive director.

Long-term data was unavailable from the other systems, but STRS spokeswoman Laura Ecklar said the board terminated 36 disability awards between July 2009 and June 2010. SERS has terminated 44 since 2009, said spokesman Tim Barbour.

Estabrook said police officers and firefighters who retire on disability are permitted by law to do other work, but cannot resume work as police or firefighters.

State Sen. Bill Beagle, R-Tipp City, questioned why the state would allow public employees to collect disability while working.

“I think it makes sense to ask the question: if someone is able to work does it merit a disability income?” Beagle said.

State Rep. Clayton Luckie, D-Dayton, said disability should be awarded if a person is not fit to do the public job. But he favors a change that would allow earned income in some cases to offset the employee’s pension benefits.

Dayton ranks high

Dayton Deputy City Manager Stanley Earley said health, fitness and workplace safety programs increasingly emphasized by the city during the past 10 years have cut workers’ compensation claims by more than 53 percent. He said that may be behind the decline in the city’s disability retirement rate from 45 percent in 2000 to nearly 24 percent last year.

Still, Dayton ranks highest among Ohio’s six largest cities for the percentage of active OP&F members who retired on disability from 2001-2010. Dayton had a rate of 19 percent, while Cincinnati ranked lowest at 6 percent.

Huber Heights, with nearly 25 percent of active OP&F members retiring on disability, ranked 18th among Ohio jurisdictions between 2001 and 2010. Kettering’s 4.9 percent rate, meanwhile, ranked 250th in the state, according to an analysis of OP&F data.

Thirteen percent of all employees who retired from Kettering since 2007 received disability pensions, a number dwarfed by Huber Heights’ 77 percent rate, the Daily News found.

Huber Heights Public Safety Director Jim Borland said he is at a loss to explain his city’s high rate, adding: “I think there’s a certain amount of abuse.”

Privacy rules cloak the disability system in secrecy, particularly for police and firefighters. OP&F does not alert jurisdictions to an employee’s disability application, nor do employers know when a worker has decided he doesn’t want to accept a disability award and instead continues working.

“Because of the practices and policies in place now, I’m possibly the last person to know,” Dayton Fire Chief Herbert C. Redden II said.

Strict rules govern what information can be shared. Employees do not have to notify the pension board that the Ohio workers’ compensation system has rejected their medical claim, and employers are barred from providing information about a worker’s health history, use of sick leave or any pending disciplinary action or criminal charges.

“We’ve got a lot of guys who were facing disciplinary action and took medical retirements,” said Maj. Glen E. McIntosh, who oversees personnel for the Montgomery County Sheriff’s Office.

In limited cases, a judge can order forfeiture of a public employee’s pension for crimes committed in office.

Pension officials say their review of a disability claim is based on medical issues alone, and an applicant’s disciplinary troubles at work are not relevant.

Catherine Turcer, director of the Money in Politics project for the government watchdog group Ohio Citizen Action, said pension officials need to be more skeptical about illness or injury claims. “They need to have good information,” she said. “Is the officer on probation? Is the officer facing criminal charges?”

OPERS won’t disclose why it gave Pizzo a disability pension in 2010. Plummer said he was regarded as a good deputy until his arrest.

Pizzo, 44, was a supervisor at the county’s Regional Dispatch Center when he was arrested by Warren County authorities on allegations he had sex with an underage boy in 2009. He resigned, agreed to surrender his certification as a peace officer and, in April 2010, pleaded guilty to a charge of unlawful conduct with an underage child he met through the website craigslist.org.

That same month OPERS gave Pizzo a disability pension.

Pizzo later withdrew his plea after the boy said he might have been 16 when the sexual encounter occurred, the legal consent age in Ohio. The Warren County Prosecutor’s Office decided last summer not to pursue the case and there are no criminal charges pending.

“It is still a problem if my deputies are meeting 16-year-old kids on the Internet,” Plummer said. “(Pizzo) was perfectly healthy the day before he got accused of any criminal activity.”

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