Auditor finds millions may have been overpaid by the state in disability retirement benefits

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

HARTFORD — State auditors informed  Gov. Dan Malloy of problems in the Office of the State Comptroller’s Retirement Services Division that may have resulted in over payments amounting to millions of dollars.

In a letter to the governor, the auditors identified four problem areas in the disability retirement system, which were brought to light by a whistleblower.

First, it was discovered that the retirement administrators stopped performing 24-month reviews, which are required by law for disability retirements. Without the reviews, “millions of dollars of payments to retirees who were no longer entitled to a disability retirement” may have been made.

Administrators said they stopped conducting the mandatory reviews because of an issue with the collective bargaining agreement that has not been resolved.

The matter is expected to be on the agenda for the State Employee Retirement Commission, which regulates on Thursday. The total amount of benefits that could have been paid out amounted to $1,055,474.

The division also failed to make changes recommended by an investigator, which may have resulted in payments to retirees that were no longer entitled to receive them.

One specific instance of this cited in the letter was a former state employee who retired on disability in 2001 with an annual salary of $44,730 because he or she was no longer able to do “suitable and comparable work.” The retiree then continued to receive benefits, even after finding employment elsewhere. The retiree reported earning between $521,452 and $792,789 per year between 2008 and 2010 at his new job while he still received state disability payments.

The auditor also found the state would send out surveys to retirees and not follow up with those who did not respond, which also could have resulted in payments to those no longer eligible.

Lastly, the division used a method of calculation from 1989 that doesn’t factor in outside salaries or wages. That calculation may have resulted in over payments. Auditors found 57 retirees that had considerable outside compensation, whose benefits were not recalculated accordingly, and it resulted in the state paying out an estimated additional $1,437.

Auditors recommended legislative remedies to clarify the policies and definitions. The auditors’ investigation into the whistleblower’s complaint is continuing.