@NCCapitol

@NCCapitol

NC jobless fraud drops, but still costly

Posted December 3, 2014

Division of Employment Security

— State unemployment leaders say their efforts to crack down on fraudulent unemployment claims are paying off, but there's still a long way to go.

At a legislative oversight meeting Wednesday, officials with the Division of Employment Security told lawmakers that better data analytics, added layers of cross-checks and other process changes are helping to reduce the state's outlay for fraudulent or incorrect claims.

For example, division tax chief Ted Brinn said that, from 2011 to 2013, North Carolina paid nearly $2.7 million to people who claimed to have been laid off by a fictitious employer. With the  assistance of the state's Government Data Analytics Center, Brinn said the division has added extra cross-checks to verify that employers are real, saving the state an estimated $5.2 million so far.

"We believe that we have essentially halted this activity as of December 2013," he told the Joint Legislative Oversight Committee on Unemployment Insurance.

Analytics have also helped prevent a tax evasion practice known as "SUTA dumping." That's when an employer with a high unemployment tax rate due to past layoffs changes its name or ownership or employer number in order to get a new, lower tax rate.

Brinn said the improved system makes it easier to find those cases, and changes to federal law have helped the state crack down on them, saving an estimated $4.4 million.

Assistant Secretary of Commerce Dale Folwell said additional checks at the beginning of the process have helped the agency do a better job of making initial decisions on claims. But the state's overpayment rate, according to federal auditors, is still 14 percent.

That means that, of the $531 million the state paid in jobless claims from October 2013 to October 2014, more than $74 million went to claims the U.S. Department of Labor considers invalid or incomplete. 

Folwell said about half the cases flagged by federal auditors as overpayments simply lacked complete weekly information on the applicant's job search. If even one week's worth of search information is missing from the file, the claim is considered incorrectly paid.

"It's a problem in a lot of different states," he said.

However, he added, the newly implemented requirement that applicants come in for a face-to-face interview has had "a dramatic positive impact" on that problem over the past quarter.

Unemployment insurance director Antwon Keith told lawmakers that only 50 to 60 percent of applicants are showing up for the appointment, which is required within the first month of claims. He said a follow-up survey found that most of the no-shows found other work before their appointment date.

Sen. Bob Rucho, R-Mecklenburg, asked Folwell if the president's recent executive order on immigration would affect the agency's budget. 

Folwell said it would, but he predicted the state will still finish paying off its unemployment debt on schedule. State officials have said they hope to finish repaying the $2.5 billion borrowed from the federal government to pay jobless claims during the recession by next year.

"Obviously, we’re looking toward another finish line, and that’s building a surplus. I’m sure it’ll have some marginal impact on that," he told Rucho.

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  • miseem Dec 4, 2014

    Seems like WRAL is sensitive to criticism of their reporting. Third attempt - Can the explanations used by the current DES administration also apply to prior administrations? And was the reporting by WRAL in prior articles (see More on this, second link, 6th paragraph) clearly inaccurate, making the prior administration seem oblivious to blatant fraud? Specifically, the statement that only 12% of claims pulled in an audit were legitimately receiving benefits, meaning that 88% should not be receiving a penny. The closest documentation I could find was that an audit showed a little over 12% of claims with some errors, just the opposite of the article, and just slightly above the national average at that time. And people claim WRAL is a liberal media outlet. At least this article states that employers are just as guilty of fraud as employees. Although the employer connection is mentioned further down in the article (and therefore less likely to be read) and not as clearly explained.

  • jimcricket15 Dec 4, 2014

    "yes, the big problem in the state is a few poor people trying to work the system not the crookster bankers in charlotte."

    I see so you support thieves, how lovely. As to the bankers, well, the Federal government was the root cause of the housing crash and resulting meltdown. Unfortunately those responsible will never see a day inside a jail cell where they belong.

  • Rebelyell55 Dec 4, 2014

    Once the money is paid back, they better move the tax rate back up on business so that the money will be there as it should and not let us get hit with borrowing money from the Fed's. NC was warned way before the recession that it's funding for unemployment was too low and action was needed, yet they refuse to take action.

  • patracles221 Dec 4, 2014

    yes, the big problem in the state is a few poor people trying to work the system not the crookster bankers in charlotte.