CT Comptroller proposes series of reforms to state disability pension system after CT Insider report

Apr. 2—Connecticut Comptroller Sean Scanlon on Tuesday proposed a sweeping set of changes to overhaul the state's disability pension system prompted by a CT Insider investigation that found the system suffers from a lack of fiscal guardrails and an absence of enforcement when recipients ignore the rules.

"My office needs more tools in our toolkit, in order to detect, investigate and root out fraud and abuse," Scanlon said at a press conference Tuesday.

He said he believes such abuse is rare, but reforms to ensure proper oversight by his office are "long overdue."

The proposed reforms include penalties when someone fails to report income they are making from a new job, increasing the number of cases investigated and changing the definitions for who qualifies for a disability.

Scanlon said he is able to make one change on his own: Overhauling surveys that help determine if someone is still eligible for a pension. For his other proposals, he said he and the Lamont Administration hope to negotiate with state employee unions. Scanlon said he had "very encouraging conversations" with labor officials.

"While I administer this plan, I don't have the direct authority to change it on my own," Scanlon said.

CT Insider reported last week a series of problems with the state's disability pension system, which costs state taxpayers $130 million a year to help nearly 4,200 former state employees who have been injured on or off the job.

The report highlighted a series of problems, including many former state employees collecting disability pensions despite working new jobs and making significant income; hundreds of recipients not submitting annual surveys used to determine if they still qualify; and few investigations taking place.

Reporters began the investigation after learning a state senator, Paul Cicarella, received the largest pension in the state in 2022 when he was paid $412,000, largely from one-time retroactive payments.

That investigation found Cicarella became eligible for a pension even though doctors determined he was capable of working a non-exertive job with his partial disability; state officials never found him such a role. He also has been able to collect a disability pension despite questions from state officials, including when they discovered after his injury he worked as a wrestling coach and had opened multiple businesses. His pension was revoked due to such questions but reinstated after he became a senator and later boosted significantly.

Cicarella was adamant he received no special treatment as a state senator and is just collecting benefits entitled to him by law.

Asked Tuesday if Cicarella's case should be re-investigated, Scanlon said his office does not comment about potential investigations their office may conduct, but "this is not just about one individual" and that this is about systemic reforms that need to happen to ensure only those who should be getting benefits are.

Taken individually, most of the concerns surrounding Cicarella's disability pension are somewhat common among many of the recipients. But Cicarella's case stood out because it highlighted so many shortfalls of the system simultaneously.

CT Insider's investigative report became a major point of discussion at the state Capitol complex soon after the story was published last week.

And Scanlon said the article prompted him to hold Tuesday's press conference with the hopes of using momentum spurred by the reporting to bring about change.

"I am confident that with the attention to this that has been received in the last week, that now is the right moment for us," he said. "The article that came out last week has given a lot of attention to this, and I want to use that attention to get this done."

Scanlon said these problems have been festering for years, but he and his predecessors have been unable to make changes because of a lack of urgency from those capable of negotiating and agreeing to reforms.

"I have my bully pulpit, and I'm using it today, and I hope others will use theirs to compel that conversation to happen," he said, referring to the governor's office and state legislators. "I don't have the direct ability to compel" changes.

Danny Livingston, the chief negotiator for the state employee unions, said during an interview there are changes that are needed to the system and believes union leaders would be interested in opening negotiations "to address win-win solutions."

Proposed changes

CT Insider's investigation found state officials do nothing when disability pension recipients fail to submit required annual income surveys meant to determine if they're still eligible. Last year, 573 recipients — about one in five — didn't submit the survey; one in 14 recipients skipped it each of the past three years.

The comptroller said he plans to immediately change how the survey is done including making it easier for folks to fill it out by having the ability to respond online. Pension recipients will also be asked to list an alternative contact for the comptroller to contact if they do not respond to a survey.

Scanlon hopes an agreement can be reached that when no one responds, his office can scale back pension payments between 80% to 95%, while still maintaining healthcare benefits, until a response is received.

CT Insider also found when someone reports significant outside income, officials virtually never follow state law to reduce their pension so it's not above their prior job's current pay. In one case, a former nurse collected a $33,000 disability pension while making $792,000 at a pharmaceutical sales job. Scanlon said his office has to ignore that law because of a 1989 arbitration ruling overriding that law.

"That has caused problems, in our estimation, for the administration of this program," Scanlon said. "Right now, our hands are tied."

He hopes an agreement can be reached with the unions so they can scale back pension payments when someone is earning significant outside income.

Disability pension recipients are supposed to lose the benefit if they find a "suitable and comparable" job. But CT Insider found more than a dozen recipients in 2021 working new jobs outside state government with similar duties and pay to the state job they left.

Scanlon said the standard is too murky and that it is "very, very difficult to apply" and deny someone a disability pension on that basis. To qualify for federal disability benefits, someone must be unable to work any job. But in Connecticut, disability pensions are more widely available because of the murkiness.

Scanlon wants to negotiate a clearer standard with unions that better aligns with what other states, private businesses and insurance providers follow.

Such a change, Scanlon said "will make our jobs easier to administer this program, and find cases in which somebody is receiving a payment, but perhaps should not."

Last year, among the roughly 4,200 people receiving state disability benefits, six recipients faced an investigation into whether they should still receive a disability pension.

Scanlon said his office is prevented from investigating more cases because a 2015 agreement with the unions only allows them to investigate if new information is brought to them.

"We find ourselves relying on tips" to open an investigation, he said.

In addition to these items needing to be negotiated, several other problems outlined by CT Insider's investigation are outside the comptroller's control; such as state officials at the Department of Administrative Services failing to ever find a less-exertive state job to transfer workers who were cleared by doctors for such a role after an injury.

Other issues outside of the comptroller's control include the Office of Policy and Management approving every request to grant "extraordinary circumstances" status, which drastically boost pension payments and the state panel that determines if someone is making enough income from a new job to no longer qualify for a pension is composed of physicians and has no one with a financial background.

Hours after the story was published, Gov. Ned Lamont said he wants to reform the system. Lamont appoints the majority of the members, including final say over who is chair, of the State Employees Retirement Commission, which determines who does, or doesn't, get a disability pension. His administration is also tasked by state law with finding new state jobs for those unable to return to their exertive state job.

Lamont said he wants the legislature to clarify which pensions should get "extraordinary circumstances" and be boosted. He also promised changes designed to do a better job transferring state employees to new less-exertive jobs and have to someone with a financial background available to the retirement panel.

The governor's spokeswoman said Tuesday the administration was encouraged by the comptroller's proposals.

"The governor agrees the state's disability pension system is in need [of] reform and appreciates the comptroller for coming up with thoughtful proposals that balance the need to make sure the system is working effectively for our state employees who use it while also ensuring we eliminate any potential for abuse," said a statement from Lamont spokeswoman Julia Bergman. "He is still reviewing the proposed reforms, which will have to be worked out at the bargaining table, but is supportive of the general concepts."

Leading lawmakers said last week they also want to tackle the problems raised with the system before the legislative session adjourns May 8.

"It's an important issue that we will find time to address," Speaker of the State House of Representatives Matt Ritter told CT Insider last week. "The story demonstrates there are a lot of interesting questions that involve hundreds of people. I think that's where you rise to the level of the legislature having to do something and the comptroller having to do something."

"Because this has been brought to our attention, we do have an obligation now to address it," Sen. Julie Kushner, the co-chair of the legislature's Labor Committee, which oversees benefits provided to state employees, said during an interview last week.

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