Responding to a whistleblower complaint, state auditors found retired state employees may be receiving disability pensions even though they’re no longer disabled.

In a special report, auditors say they found that the status of some retirees hasn’t been reviewed by the Medical Examining Board in two years to determine if they’re still disabled. Other disabled retirees are reporting hundreds of thousands of dollars in outside income, which means it’s possible they are no longer disabled. The state requires disability payments to end if the disability has ended.

In one case, an employee who was earning $47,284 a year before leaving state service now has an annual disability pension of $33,479 and was earning more than $183,000 in outside income. Another was earning $43,566 before leaving state service and was receiving a $28,678 annual disability pension while earning $175,220 in outside income.

“While such retirees may be eligible for continued disability benefits, there is a question of whether those benefits should be subject to a statutory reduction because of those outside earnings,” the Auditors of Public Accounts wrote Wednesday in their letter to Gov. Dannel P. Malloy.

The auditors said the state should be reviewing the outside income and lowering the disability pension payments accordingly. The auditors also reviewed the work done by the division’s former legal investigator, which found that 57 retirees who had considerable outside earnings were paid an additional $1.4 million because those payments were never off-set by those outside earnings.

The state auditors wrote in their letter to Malloy that “the failure of the division to follow through completely on the disability status of retirees who report outside income from working may have resulted in payments to disability retirees who are no longer eligible to receive them. Those amounts of those payments could be significant. Because investigations were discontinued prior to determining whether the retirees’ disability did in fact end, disability fraud could have occurred and gone undetected.”

There’s also a dispute over the definition of disability retirement and they urged a legislative solution.

Republican lawmakers said the auditors’ report demonstrates what’s wrong with state government.

“This is ‘Exhibit A’ of why our state is going broke,” Sen. Michael McLachlan, R-Danbury, said. “Look no farther than this report. Taxpayers’ money is flying out the door with no oversight. It’s shameful, and it adds insult to injury since we are mired in this budget crisis.”

State Comptroller Kevin Lembo, who oversees the State Retirement Commission, disagrees with the characterization.

Lembo said his office was told by the State Employees Bargaining Agent Coalition and the Office of Labor Relations that these issues were a matter for collective bargaining.

“My office identified this issue two years ago and asked then for labor and management to find a way to fix it. Since then, I have aggressively urged both sides to reach resolution, as they must through collective bargaining,” Lembo said. “If it were within my authority to resolve this, I would do so, but the state comptroller does not have the authority to unilaterally decide collectively bargained matters.”