Suffolk police Sgt. Brian Bugge savored a moment of pure satisfaction when he watched the videotapes of John Luciano, would-be disabled cop, vigorously scrubbing down his 22-foot boat, the Lucky L. The tapes seemed like the kind of evidence an investigator often dreams of and seldom gets.

Luciano, a police officer whose career had gone into a nosedive when the department caught him in compromising relationships with drug dealers, was on sick leave and applying for a disability pension, claiming a bad back. He wore a brace, hobbled around with a cane and told county doctors he could hardly move.

The videotapes, however, seemed to tell a different story. On three summer afternoons in 1988, Bugge and other investigators watched Luciano from hiding as he worked on the Lucky L at a marina in Mastic. The first time Bugge shot still photos, and the next two sessions were captured on videotape. The tapes showed Luciano doing things he'd just told doctors he couldn't do, repeatedly bending, stretching, crouching, reaching, squatting, lifting, working in a bent-over position, balancing on one leg - all without any sign of pain or hesitation. The brace and cane weren't around.

Investigating another officer wasn't Bugge's favorite kind of work, but the assignment to head the Luciano investigation didn't really bother him. As Bugge saw it, the disability pension system was a safety net under every officer, and cases like Luciano's put holes in the net. And in his nine years on the job, he'd seldom seen evidence that looked so persuasive.

The department sent the videotapes to state pension officials in Albany and began drawing up departmental charges of pension fraud against Luciano. Since Luciano was only 40, a good deal of money was riding on the outcome.

If the state found him disabled and he lived the average male lifespan of 72 years, he'd collect more than $989,000 in pension checks, tax-free. But if the department could bring disciplinary charges against Luciano and fire him, they hoped the state would deny him a disability pension. Then, he'd get only about $179,000 from a regular pension by age 72, and that money would be subject to taxes. So the disability finding could net Luciano more than $800,000 extra over a normal lifetime.

The videotapes, Bugge figured, put Luciano's chances for a disability pension at about zero. But as he and the Suffolk Police Department would discover, they still had a lot to learn about the workings of the state pension system.

More than any other single case, the lengthy behind-the-scenes battle between the Suffolk Police Department and the New York state pension system over Luciano's disability pension illustrates the obstacles Long Island police officials have faced in trying to get state officials to reject what the departments considered fraudulent applications.

On Sunday, Newsday reported that since the early 1980s Nassau police officials have been sending state pension officials reports and videotapes about officers they were investigating for malingering. Police officials said their letters and questions went unanswered. The state took the position, they said, that disability decisions were between the state and the individual officer and that the police departments didn't have any standing to become involved.

In the Luciano case, the Suffolk Police Department managed to get its foot farther in the state's door than its counterpart in Nassau. Police officials pressured the pension system into holding hearings on Luciano's disability, with the videotapes as the key evidence.

A detailed examination of this case - based on hundreds of police, state and medical records and interviews with many of the participants - shows how an officer in trouble on the job, facing evidence that raises harsh questions about his disability claim, can still prevail because pension officials and doctors give him the benefit of the doubt. As police officials see it, the Luciano case also shows how the pension system can be exploited by applicants and how the system, in protecting its bureaucratic turf, sets a threshold for evidence of fraud so high that no investigation could ever satisfy it.

Officials of the Nassau and Suffolk police departments, frustrated by such jousts with the state, describe the pension bureaucracy as so remote and uncooperative, so enshrouded in legalistic fog generated by a handful of lawyers and doctors, that common-sense evidence has no chance to penetrate.

Most police disability cases involve claims of bad backs or other orthopedic problems in which applicants' complaints of pain can be hard to verify or refute solely by medical evidence. Thus, police officials say, evidence bearing on an applicant's credibility is often crucial - and, they say, generally ignored by the pension system.

State pension officials, however, say they gave the county a fair hearing in the Luciano matter and that the county simply put on a weak case. They said they put more weight on medical testimony than on surveillance videos and that the county's case fell short in that regard. One of the three doctors who testified for the county wasn't a back specialist, and another who'd watched the video and given Bugge a written statement that Luciano wasn't disabled testified at a hearing that he was disabled.

Although state officials say they don't consider investigating fraud to be part of their job, they say their doctors and hearing officers do a good job in evaluating who's really disabled. They say all information and records submitted by police departments are considered.

The credibility of disability applicants becomes a multimillion-dollar question for areas like Long Island, with aging police forces and high rates of disability claims. In some recent years as many as one out of three police retirees from Nassau and Suffolk have gotten tax-free disability pensions - a rate substantially higher than in the rest of the state system and in many major cities with higher crime rates.

Former Suffolk police Sgt. Joseph Michaels could have told Bugge (pronounced boo-JAY) what to expect. He's seen the system from three perspectives. As medical sergeant for the Suffolk police in the early 1980s, Michaels looked into suspicious disability cases. Eventually he retired on disability himself, after a struggle with a suspect caused knee damage requiring three operations. Now, as chairman of the Criminal Justice Coordinating Council, part of Suffolk County government, he studies law enforcement cost issues. Watching officers he considered fakers get disability pensions was the most frustrating part of his police career, Michaels said. He said he came to view 35 to 40 percent of disability applications as bogus or significantly questionable. But the state wasn't interested in evidence that contradicted the applicants' claims, he said.

"That's a situation that presented itself over and over again when these things got to the state," Michaels said. "You say to yourself, 'What did I waste my time for?' " As with many disability cases considered suspicious by police officials, John Luciano's began after he got in trouble on the job. Cited for bravery in 1985, he became the target of a departmental misconduct investigation less than two years later. When he filed his first accident claim in July, 1987, the department's internal affairs unit was investigating tips that some of his friends were cocaine dealers.

"I began to hate to go to work as I wondered what would be next," Luciano, who refused to be interviewed for this story, said in a written statement to investigators.

In his accident claim, Luciano said he'd hurt his back lifting a box of flares into his police car. Nobody saw the incident, according to records. He took several days of sick leave and was assigned to light duty.

After interviewing Luciano, internal affairs investigators wrote a memo describing him as "purposely deceptive when questioned, insolent at times, and uncooperative at best."

Nevertheless, the memo said, he confirmed the allegations: "Luciano acknowledged longstanding associations with three individuals, civilians in the Fifth Precinct [Patchogue] area, whom he suspected were dealing cocaine. Two of these individuals had extensive criminal backgrounds, and all three were arrested during a recent wiretap investigation for conspiracy to distribute cocaine. Officer Luciano never reported his suspicions to the department nor took any police action to terminate this activity."

One day in November, 1987, Luciano, assigned to light duty, was working at the front desk of the Fifth Precinct. He was unpopular in the precinct, Bugge said, because while under investigation he had spread false drug rumors about other officers, then admitted later he'd made them up.

A departmental order came over the teletype. Luciano, who lives in Shirley, read it and learned he was being transferred to the First Precinct in West Babylon, about 30 miles from his home.

About an hour later, the desk sergeant, Henry Oman, heard a noise and looked up. Luciano lay on the floor with a pained expression. In testimony, Luciano said he'd tripped over a broken step while coming down from the raised front desk area.

"My supervisor had called me down for some paperwork . . ." he testified. "As I was walking down the step, the step grabbed the heel of my shoe. It tripped me . . . and I was knocked down and unconscious."

Oman gave a different version in his written report: ". . . at no time was the PO [police officer] unconscious. I was seated 6-7 feet away from the steps and was the only supervisor in the area. I did not request PO Luciano's presence nor did he have any reason to be leaving the desk area."

Luciano took another sick leave. His own orthopedist, Dr. Mark Gudesblatt, diagnosed him as disabled with a herniated disc. But a second orthopedist, Dr. Leonard Weiss, a consultant for the county, reported: "Based upon the physical examination today there is no objective evidence to substantiate the subjective complaints he has."

Despite modern diagnostic tests such as magnetic resonance imaging (MRI), such differences among doctors remain common, because while the tests can identify herniations or bulges in the discs of the back, there is still no test for pain. Richard Lerner, a lawyer who has represented scores of police disability applicants, said: "You can have a small herniation with no pain. You can have a small herniation with substantial pain. You can have a large herniation with no pain. You can have a large herniation where the person can't even move and has to have emergency surgery."

That means an applicant's complaints of pain are still an important part of contested disability cases. Expecting Luciano to file for a disability pension soon, the department opened a new internal investigation, this one into his bad-back claim, and assigned Bugge to head it. Bugge was a rough-cut, workaholic amalgam of intellectual and street cop, a former New York City corrections officer with a masters degree who taught criminal justice at Suffolk Community College. An edge of contempt would come into his voice when he talked about police whom he believed discredited the craft by malingering or lying to fellow officers. His phrase for such people was "this piece of garbage."

On July 6, 1988, Bugge watched and took still photos as Luciano brought the Lucky L into its berth at the Forge River Marina in Mastic. He noted that Luciano did all of the unloading and cleaning while his companions waited on the dock. "He also lifted a large cooler/chest half filled with liquid that, estimating by his arm span, appeared to be approximately three feet by two feet by one foot. He carried the chest over to the side of the boat and dumped the liquid, probably water, overboard," Bugge wrote in his report.

To get better evidence, Bugge used a video camera on his next surveillance. He learned that Luciano had an appointment on July 15 with Dr. Jose Escobar, a physician with Suffolk County. He watched Luciano arrive, limping, wearing a brace, using a cane, with his wife driving the car. " ... [H]e complained of severe pain and restricted all his movements," Escobar later wrote of the visit in a memo.

Then Bugge followed Luciano to the marina and videotaped him as he worked on the Lucky L. An Escobar memo, written after he viewed the tape, described the scene: "The video tape revealed PO Luciano, dressed in shorts, bending, extending his back, twisting his back, performing heavy work on the deck of the boat. Evident was no limitation of motion. Evident was no indication of pain. The video tape also showed his wife evincing no concern regarding her husband's activities." His limp, this memo noted, had disappeared.

When Luciano came back to work in early August, he was again limping, wearing neck and back braces and using his cane. But he wasn't on the job long. On Aug. 8, he pleaded guilty to departmental charges that he "failed to take any police action concerning information he had received regarding the illegal sale of narcotics" and that he'd failed to tell his commanders what he'd learned from his drug-dealer associates. The department suspended him without pay for 30 days and fined him 20 leave days.

On the first day of his suspension, Lt. James Maher and Sgt. Robert Haack videotaped Luciano again. Their report describes the tape: "He's on the deck of his boat . . . He's shirtless, wearing swim trunks. His cane and back brace are never utilized, nor are they anywhere in sight . . . For the first 15 minutes Officer Luciano can be observed doing light and continuous lifting and hoisting. He begins doing some cleaning . . .

"For the next 35 minutes [he] engages in a sustained cleanup action on his boat. Utilizing a long-handled scrub brush and a plastic bottle of liquid detergent, he scrubs down the entire interior and exterior of his boat. For the exterior of the hull he extends himself by balancing precariously on one leg and stretching toward hard-to-reach spots. He continuously stretches, bends and squats without showing any visible signs of pain and discomfort. He never takes a rest or a brief respite, and he never holds or motions toward his back." Family members were there but didn't help, they noted.

Investigators also watched Luciano piloting the boat. But when Bugge and Lt. James Storz questioned Luciano, he denied doing things they'd seen on the tapes. Bugge: "Was there ever a time after June, 1988, when you went out on your boat, piloted your boat, scrubbed your boat down, hooked up lines, bent and did a lot - "

Luciano: "Never! No."

The police department sent the videotapes to pension officials in Albany, who already had received Luciano's disability application. In January, 1989, Insp. William Okula, then commander of the internal affairs bureau, followed up with a letter to pension officials, noting that the departmental investigation had concluded that Luciano "fabricated and/or greatly exaggerated the nature and extent of his injuries and disablement."

Okula sent Bugge's investigation report to the office of then-Commissioner Daniel Guido, recommending charges of malingering, lying to a superior and submitting a false report. "Officer Luciano has become a disgruntled employee who is now attempting to defraud the department because of his own misguided sense of injustice," Okula wrote.

The charges brought by the department alleged that Luciano "created and maintained an ongoing fraudulent scheme to deceive this department, the Office of Employee Medical Review, the New York State Workers Compensation Board and the New York State retirement system by falsely claiming that he is permanantly disabled . . ."

Then, unexpectedly, the department got a form letter from Albany; the retirement system had approved Luciano's disability pension. Nobody from the pension system had expressed any interest in the pending fraud case, and state officials acknowledged later that they'd made the decision without looking at the videotapes, Bugge and other police officials said.

Guido, now an associate professor at John Jay College in New York, said his aides got a hostile reception when they called pension officials to question their handling of the case. "They said we had 'no standing' to bring this up," Guido said. "The general reaction was 'Who the hell are you people and why are you throwing this monkey wrench into our system?' "

At this point, the county faced a financial and moral dilemma. "The easy way out," Guido said, would have been to stop opposing Luciano's pension and let the state send him pension checks for the rest of his life. That would get him off the department's payroll and free up a budget line for hiring a new, probably less troublesome police officer.

But Guido, known in the department for his straight-arrow views on ethics, decided that would be condoning what he viewed as fraud. "And we were sure at that time, with the evidence we had, that we could prevail and convince the state that they ought not to be awarding this gentleman a disability pension."

State officials, for their part, say they went out of their way to give Suffolk a fair chance to make its case against Luciano. Even though the state attorney general ruled in 1960 that municipalities have no legal standing to take part in pension decisions, state pension officials note, the system gave Suffolk a formal hearing to present its case, the first time in senior state officials' memory that that's ever been done. "The bottom line is they didn't put in a very good case," Deputy State Comptroller John Mauhs said.

Preparing for the hearing, Bugge got copies of the videotapes and the MRI study of Luciano's back and began showing them to doctors. A physician at the University Hospital at Stony Brook agreed to interpret the MRI if Bugge would keep his name out of the case. This doctor, he said, explained that the MRI didn't show anything conclusive. One disc had a slight bulge that might be a small herniation. But many people have such bulges without being disabled, and there was no indication of pressure on the spinal nerves, which causes back pain.

Weiss, the county consultant, who hadn't seen the MRI when he examined Luciano before, examined the MRI, watched the videotape and agreed with the Stony Brook doctor. He gave Bugge a statement that the MRI showed nothing significant and added: "I can now state, unequivocally, that Officer Luciano . . . is indeed capable of performing full duty as a police officer."

Dr. David Koretz, who'd previously diagnosed a "moderate partial disability" and found Luciano unable to work, gave Bugge a strong statement concluding otherwise. The MRI did not show "any strong objective medical evidence" of disability, Koretz wrote, adding: "It would appear from a viewing of these tapes that Officer Luciano does not have anything wrong with his back. I would say that, in my opinion, his subjective complaints of pain should be viewed as highly suspect."

The hearing turned into five hearings; in all, the process of reconsidering Luciano's pension took two years. Through all of it, the county had to keep him on the payroll at his full annual salary of $51,173. But because he'd already been approved for disability retirement, he didn't have to work. Bugge's commanders became convinced that the snail-like pace was the state's way of getting back at the county for treading on state turf. State officials say that's not true. Nevertheless, by the time the lengthy proceedings were over, the county would pay Luciano more than $100,000 in salary for doing nothing.

As the hearings dragged on, Bugge realized that things were not going the county's way. The administrative judge, DeForest Pitt, wasn't someone whom both sides had agreed upon, as in arbitration. He'd been selected by the pension system and was paid by the pension system, which was treating the county as an opposing party in an adversary proceeding. Pitt did not return calls from Newsday.

Luciano's lawyer, Allen Kranz, whose law firm was representing him under its contract with the Suffolk PBA, seemed to Bugge the strongest player in the contest, a fox in a flock of bureaucrats. "Kranz was a very good lawyer, one of the type of guys where you say, 'If I ever get in trouble I'll get this guy,' " Bugge said. "He totally outgunned the county attorneys, because they were new, and you could see they looked up to him. You could see by the way they were reacting to him - he was almost a mentor."

The pension system refused to release the hearing transcripts to Newsday, citing privacy concerns. But according to participants, the doctors who testified for the county did not make a strong case, and Pitt appeared uninterested in the videotape. The county presented three doctors: Escobar, Weiss and Koretz. Escobar testified that Luciano was fit for duty. But his pronounced accent and the fact that he wasn't an orthopedist undercut the impact of his testimony, participants said.

According to Pitt's written decision, which summarizes some of the testimony, Weiss also testified that Luciano wasn't disabled. But he had to acknowledge under questioning that he couldn't say for sure that Luciano wasn't disabled on the date of his application because he had examined Luciano several months earlier. There was no evidence that Luciano had experienced any new injury between the two dates, but nevertheless Pitt cited the point as significant.

Koretz, according to Pitt's decision, testified that Luciano was disabled - the opposite of what Koretz had told Bugge in a strong written statement. But under the rules of evidence for such hearings, the written statements Bugge had gotten from the doctors weren't allowed as evidence. Why Koretz changed his opinion could not be learned; he did not respond to calls and letters from Newsday.

With the county's case faltering, Kranz approached Bugge during a recess and asked why the police department didn't just drop its opposition. Wasn't it clear that the state didn't want to change its mind?

Bugge said: "Kranz says, 'Why do you guys care? You know he's a moron, I know he's a moron. Why don't you just let this guy go?'

"I said, 'That's 'cause you're a lawyer, that you're missing the principle of the thing. We're not going to let him go - he's a phony and we're going to fire him.'"

Kranz confirmed they had a conversation along those lines but denied calling Luciano a moron. Luciano's doctor, Gudesblatt, testified that Luciano was disabled. So did Dr. Barry Jupiter, an orthopedist who examined him for the pension system. State officials said they believe they sent Jupiter copies of the videotapes. Jupiter did not respond to requests for an interview, but through an aide said he didn't recall seeing any tapes.

But most damaging of all to the police department's case, Bugge realized, was the "good day" loophole. This point came up repeatedly as Kranz questioned the doctors - wasn't it possible that Luciano was merely "having a good day" when he worked on the boat? Or three good days? Wasn't it possible that on other days he was in pain? Wasn't it possible that at other times he was disabled? Yes, the doctors would say; yes, that was possible.

It was only after Bugge had heard this several times that the full implications became clear - short of videotaping someone 24 hours a day for months, there really wasn't much chance that a police department could overcome the good-day loophole and prove malingering. If an applicant could show some kind of irregularity in his back and produce a doctor who would say it was disabling, the good-day loophole pretty well assured his success. Three surveillances hadn't been enough in the Luciano case, so why would 10 surveillances be any better? If a disabled person could have one good day, or three, then he could also have 10.

"Once we got to the hearing, common sense went out the window," Bugge said.

Kranz, in an interview, said the odds had been against the county all along. "When you go up against the state retirement system, you've got a tough row to hoe," he said. "You've got an administrative agency that's got a right to rely on their own expert's opinion as long as it isn't irrational. You get a hearing officer that's appointed by the retirement system and paid by the retirement system."

The videotapes, Kranz said, "didn't prove a thing. It just showed that on a couple of isolated days in the summertime when it was warm, somebody with a back problem was able to do things they might otherwise not be able to do."

When Pitt's decision finally arrived at the Suffolk police department, the finding was no surprise: "The County has not met its burden of proving that John Luciano is not incapacitated for the performance of his duties." Now 46, he retired July 1, 1991, and collects a tax-free pension of $34,116 a year. In a recent interview, Suffolk Police Commissioner Peter Cosgrove was asked whether the department would take on the pension system again if police officials felt they had strong evidence that a disability applicant was faking.

No, Cosgrove said. "If we had a similar case, I clearly would not expose the county to a situation like that. I would perhaps contact them, let them know what I had. If I didn't get cooperation, I would just back away. I'd do what I think was right, but I'm not going to fight them."