The California Public Employees’ Retirement System (CalPERS) is unlawfully withholding information necessary to help safeguard the system from waste, fraud and abuse, a just-filed lawsuit alleges.
The problem of disability fraud has plagued California’s public pension systems for decades, costing taxpayers untold millions.
One of the first documented cases occurred in 1992, when a retired officer drawing a tax-free disability pension was spotted competing in a local rodeo.
As discussed in more detail below, historically lax oversight encouraged such abuses, which continue to this day.
Earlier this year, for example, the Los Angeles Times reported on an allegedly disabled firefighter who had competed in a half-marathon. The Times report ultimately led to an arrest and calls for reform from city councilmembers.
To its credit, and likely in recognition of the fact that the problem extends beyond just those who compete in athletic competitions while on disability, CalPERS encourages the public to report cases of suspected fraud and abuse to its disability fraud tip line.
Yet the fund, which manages over $300 billion in assets and receives nearly $20 billion annually from California taxpayers and public employees, has inexplicably refused to disclose the very information necessary to identify such cases of potential abuse.
Today, the Nevada Policy Research Institute (NPRI) has filed a public records lawsuit against CalPERS to obtain this information for its Transparent California website — the state’s largest and most comprehensive public pay and pension database.
Specifically, Transparent California requested the one-word designation of either “regular” or “disability” that would identify the type of pension received by retirees, so that the public could better assist CalPERS in its efforts to identify cases of disability fraud.
Despite the law’s presumption of openness, and binding case law precedent requiring disclosure of the requested information, CalPERS denied the request by citing a statute that makes confidential employees’ personnel and medical files.
“It’s highly unlikely CalPERS actually believes providing the one-word designation of the type of benefit received by its members is equivalent to providing a copy of their medical records, which is properly exempt from disclosure,” said Transparent California Executive Director Robert Fellner.
“Instead, CalPERS is exploiting the lack of any penalties for governments who unlawfully withhold public records, secure in the knowledge that taxpayers will be the ones required to pay all legal fees incurred.
“Sadly, the lack of teeth in California’s Public Records Act has effectively negated the presumption of openness enshrined in state law. The Legislature must amend the law so that those who violate it are held personally liable, just like any other citizen would be.”
Abuses previously uncovered
Public pension disability fraud in California has been an issue since at least 1992, when investigators uncovered an officer who was drawing a tax-free disability benefit competing in a local rodeo. Further investigation revealed the retired officer had won gold and silver medals in a Police Olympics swim competition the very month she filed for disability, according to an Associated Press report.
In 2005, the Sacramento Bee exposed widespread fraud at the California Highway Patrol Department, where over 80 percent of retiring chiefs would claim injury within 2 years of retirement. Then-Governor Arnold Schwarzenegger appointed a task force to investigate the Bee’s findings, which culminated in multiple arrests.
More recently, the Los Angeles Times uncovered abuses taking place in the city pension fund, like a firefighter who competed in a half-marathon while claiming disability for an injured knee. At least one retired officer has since been arrested on suspicion of disability fraud since the Times published their findings earlier this year.
“These types of abuses are naturally much easier to detect when the pension fund distinguishes disability benefits from a regular pension,” Fellner said.
“In addition to both the city and county fund of Los Angeles, nearly two dozen of California’s independent pension funds do disclose this information, further undercutting CalPERS arguments for secrecy.”
As indicated above, CalPERS itself recognizes the importance of the public’s assistance in identifying cases of disability fraud, and encourages the public to report suspected cases of fraud to its disability fraud tip line.
“Refusing to disclose benefit type prevents the public from providing the very oversight CalPERS claims is essential in order to safeguard against waste, fraud and abuse,” Fellner said.
CalPERS refusal to identify benefit type on the grounds of confidentiality is even more perplexing, given the vastly more comprehensive and invasive information disclosed by the agency elsewhere.
“It’s hard to imagine a coherent legal standard that shields benefit type, while simultaneously making public the vastly more comprehensive information found in CalPERS own public hearings and state Workers’ Compensation reports,” Fellner said.
For more information, please contact Robert Fellner at 559-462-0122 or Robert@TransparentCalifornia.com.
Transparent California is California’s largest and most comprehensive database of public sector compensation and is a project of the Nevada Policy Research Institute, a nonpartisan, free-market think tank. The website is used by millions of Californians each year, including elected officials and lawmakers, government employees and their unions, government agencies, university researchers, the media, and concerned citizens alike. Learn more at TransparentCalifornia.com.