Employment Security uncovers fraud in its own offices

Posted October 3, 2014

— In trying to improve procedures to verify who qualifies for unemployment benefits, the state Division of Employment Security found a worker at the agency collecting jobless benefits.

A WRAL News investigation in 2012 found Employment Security's claim accuracy was the worst in the country, allowing extensive fraud, including a jail inmate collecting unemployment.

Dale Folwell, a former lawmaker who now heads the unemployment agency, has pushed a culture change so that the state verifies that people receiving benefits actually qualify for them before the checks are sent out.

"We were paying money out on the first floor of the building and then trying to chase it down on the fourth floor, and that's not really fair to the citizens," Folwell said Friday. "We have a responsibility to be good fiduciaries and good stewards of this money."

Tightening up verification came at a price.

The U.S. Department of Labor was able to determine that only 12 percent of a random sample of North Carolina residents receiving jobless benefits in 2012 should be getting them. At the same time, the vast majority of checks went out on time.

Since then, accuracy improved dramatically – it was up to 58 percent at the end of June – but more payments were delayed, with only two-thirds of the initial checks issued within 21 days.

Both numbers still lag well below national standards, which is 87 percent accuracy and 87 percent of initial checks issued within 21 days.

The hard look in the mirror also uncovered warts. Folwell found workers in the Employment Security building who owed the agency money, including one who even collected a state paycheck and unemployment.

"It was embarrassing," he said.

Folwell declined to identify the worker collecting unemployment, saying only that the person no longer works at the agency. The state has filed to recoup the unemployment money that was wrongly issued, he said.

Employment Security also has stepped up crosschecks to make sure businesses pay unemployment insurance. About 10,000 letters recently went out to inform business owners of their obligations.

"Some individuals don't realize that they should have been filing unemployment taxes," he said.

Another improvement he highlighted: The Employment Security call center now answers 97 percent of its calls, up from a low of 3 percent 18 months ago.


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  • ospreysilver Oct 6, 2014

    Guess what to make NC Government work more cost effectively, accurately, etc we may need to actual hire and pay more qualified staff to make it happen. Right now we are expecting the lowest paid state employees in NC, which is one of the lowest paying states in the US to fix a system that doesn't work well anywhere. Its like asking the kid at the dollar general to build a space shuttle with a box of legos. Just saying you get what you pay for!

  • ohmygosh Oct 4, 2014

    So ES running out of money is really a problem of sending the available $ to qualified applicants? Their high of 58% accuracy is abysmal.

  • 50s Child Oct 4, 2014

    View quoted thread

    Oh, that's rich. For two months I called asking what was going on with my claim. The people at the 800 number would only tell me "it has to be adjudicated". I finally went in person and the man there slipped up and told me nothing at all had been done on my claim! The head of the Oxford office then claimed that by law, they had to ask the last employer TWICE, not once, if they don't respond within ten days. I know for a fact this is not true; if the employer does not respond, the benefits begin. I still have the emails.

    I let WRAL's I-team know about this at the time and never got a response from them, nor from the ESC - the head of the Oxford office and her manager refused to give me the names of their superiors - nor from any of my elected reps. I believe this was AFTER the PC appointee of Bev's had been subpoena'd for refusing to give answers to a state senate. Disgraceful. But fully foreseeable.

  • un4given1 Oct 4, 2014

    They need to audit the Cumberland County Department of Socical Services and their employees receiving benefits.
    And my God someone needs to audit the schools and where all their money goes.

  • wlbbjb Oct 3, 2014

    Congratulations Mr Folwell. We need one of you in every government agency. I know of at least one social service office that needs airing out.

  • USMC Vet Oct 3, 2014

    View quoted thread


    If that employee told applicants that, they were wrong.
    The agency has always checked past employers. If someone didn't have one, they wouldn't have qualified.

  • chatamite Oct 3, 2014

    Problem is, they are also sending out letters to people that do not own or run businesses or have employees, stating that information shows they need to send in their U.I. number or apply or one. Then when you call them to tell them about their mistake you get a recording or busy signal for hours. Frustrating.

  • disgusted2010 Oct 3, 2014

    View quoted thread

    Pretty broad brush isn't it?

  • Bryon McKay Oct 3, 2014
    user avatar

    Correct me if I'm wrong but since the employee was collecting benefits while employed there wouldn't that be embezzlement and subject to prosecution?

  • USMC Vet Oct 3, 2014

    The NCESC is so far behind the times electronically, no thanks to previous administrations who wouldn't approve the funds to keep their equipment and software updated, to hiring employees of their own of below par intellect, I'm surprised they got anything right.

    As for this statement...
    "Dale Folwell, a former lawmaker who now heads the unemployment agency, has pushed a culture change so that the state verifies that people receiving benefits actually qualify for them before the checks are sent out."

    The NCESC verified qualification before sending the first check out for years. They did it by sending a form to the past employer or the past employers affected, asking for verification of employee qualification and giving them 10 days to respond or lose the right to respond with the check going out after that period of time if warranted.

    What more can the state do to verify a person's right to the benefits?