Comptroller Sean Scanlon proposed reforms Tuesday to a state disability pension system that attracted little attention until a Hearst Connecticut story last week outlined a lack of oversight.
An arbitration ruling in 1989 and a memorandum of understanding reached in 2015 limit the state’s ability to detect fraud among the $130 million in annual payments to 4,200 former state employees claiming on-the-job injuries.
Scanlon, who took office in 2023, said that he and his predecessors have been frustrated by rulings and policies that effectively bar some inquiries into potential fraud, even if he believes the system generally works well.
“But there are instances where our office has caught people who are abusing the system,” Scanlon said. “And we want more tools in our toolkit to continue finding those people. Right now, our hands are tied.”
The 2015 MOU “basically says that once somebody has been investigated one time, we cannot investigate that a second time without new evidence,” Scanlon said. “Obviously, it’s hard to have evidence unless you investigate people.”
Hearst reported that records show that many former employees are collecting disability payments despite working new jobs or, in other cases, failing to submit the annual surveys used to determine continued eligibility.
Scanlon said he is demanding that those who fail to make those annual filings will see their benefits slashed until they become current. In many cases, Scanlon said, he suspects the failure was an oversight.
By not completely suspending benefits, the recipients would continue medical coverage, he said.
“But it is still an 80% to 95% reduction of their pension and will be immediately felt by them,” Scanlon said. “That is a way for us to then compel them to give us that information, so that we can verify whether or not they still need the assistance of that pension, or whether their outside income has risen to the point that they no longer need that help from us.”
Scanlon’s office oversees the payment of benefits, but the State Employees Retirement Commission determines who gets a disability pension.
The Hearst examination of the system arose from an inquiry into how state Sen. Paul Cicarella, R-North Haven, who was injured during his brief employment as a correction officer, came to receive $412,000 in disability payments in 2022, largely from one-time retroactive payments.
His pension was revoked after state officials found he was working as a wrestling coach and had opened multiple businesses. It was reinstated by the commission after his election as a state senator, but Cicarella told Hearst that he recovered the benefit based on the law and an appeal brought by his lawyer, not his position.
Scanlon declined to comment Tuesday on Cicarella’s case but acknowledged the story played a role in the timing of his proposed reforms.
“This is, in my opinion, a long-overdue discussion, and one that has been prompted in the last week by an article that in many ways encapsulates some of the challenges that we face in administering the system,” Scanlon said.
Scanlon said his office will be pushing to revise the “suitable and comparable job” standard that is supposed to encourage injured workers to take other positions that are suitable to their physical condition.
He expressed annoyance at the state’s poor record at placing injured workers in other jobs, rather than default to a disability pension, and that the woman who runs the state’s Workers’ Rehabilitative Services described the agency as the state’s “best-kept secret.”
“I was disturbed by the comment,” Scanlon said. “That shouldn’t be the case.”
Scanlon said some changes will require collective bargaining, but he senses an openness from the unions.
A spokeswoman for the unions agreed, if to a point.
“That said, we have long pursued win/win solutions that would improve the process for all concerned,” said Drew Stoner, the spokeswoman. “We hope to continue this work with the Lamont administration to explore those ideas.”
In many cases, the disability payments are modest. The unions are expected to seek higher benefits in return for greater flexibility in how the program is run.