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Payment delays continue as state seeks to curb unemployment claims fraud

Posted February 4, 2014
Updated February 5, 2014

— The number of unemployed North Carolina workers who waited longer than three weeks for their initial benefit check increased after a new unemployment insurance law took effect last summer.

Leaders with the North Carolina Commerce Department's Division of Employment Security say the delays are largely due to new procedures put in place to cut down on millions of dollars in over-payments to unemployed workers who are ineligible for benefits or are trying to game the system. 

"The last thing an unemployed worker needs is for us to send them a letter asking for money back," said Dale Folwell, a former lawmaker who now heads the division. 

During a Monday interview at the division's headquarters on Wade Avenue, Folwell acknowledged the backlog even as he touted the agency's successes. The division has reduced the number of appeals regarding initial unemployment claim decisions. Backlogs in its two appellate divisions have been reduced or eliminated. And the agency has cut back on the amount of money it has to demand back from recipients. 

But those successes have come at a cost. More work now goes into evaluating an initial claim. While some cases are disposed of quickly and a first benefit payment is issued within a week, other cases where employers and employees differ on the reason a worker lost his or her job take more time to lock down the details.

"We have an obligation to do it correctly, not just quickly," Folwell said. 

Dealing with conflicting priorities 

Federal standards require that the state pay 87 percent of first-time claims within 21 days.

After being close to that mark every month during the first half of 2013, the number of first-time claims paid in accordance with federal standards dipped to 70 percent in September, according to figures issued by the U.S. Department of Labor. The rate of claims paid began to rebound in the last three months of 2013, but it was still 10 percentage points below what federal law requires.

North Carolina first time unemployment claims

SOURCE: U.S. Dept. of Labor

In July, 81,423 people were collecting unemployment benefits. That's now down to 76,549, according to data from the U.S. Department of Labor. For the week ended Jan. 18, 8,097 people filed for first-time unemployment claims. However, specific data on how many people were in the backlog queue was not immediately available Tuesday.

Folwell said the state is in the process of adding more workers to process first-time claims. At the same time, changes made in response to a new state unemployment law are still being put in place. Once those changes take hold, he said, the state will eventually work its way back up to meeting the federal timeliness standards. 

"DOL is aware of the backlog, and we are monitoring the situation," a department spokesman said when asked about the issue in January.

Also monitoring the situation are state lawmakers, some of whom say they have received calls from constituents bewildered by delays in unemployment insurance payments. 

"Some of them go back to Nov. 1," Rep. Julia Howard, R-Davie, said of unemployment claim issues with which she has dealt.

Howard is also chairwoman of the legislature's Unemployment Insurance Oversight Committee, which is scheduled to meet Wednesday morning. Committee members are due to hear a report from Folwell on the claims processing backlog.

Not all lawmakers say they have heard from constituents with unemployment payment problems. Rep. Tom Murry, R-Wake, and Sen. Ben Clarke, D-Hoke, said Tuesday they haven't heard complaints.

Still, others say it is a top issue for their constituent service operations.

"It is one of the top four issues my office hears about," said Rep. Tricia Cotham, D-Mecklenburg.

Sometimes, she said, lawmakers find that there are problems with a particular case. Other times, the delays are harder to explain. Cotham shared one recent email from a constituent who had been waiting roughly a month for an initial claim check.

"How much longer will I have to wait?" the constituent asked.

It's a question Cotham said is common among those who are waiting.

Lawmakers are not the only ones hearing about delays in first-time payments. 

"We're hearing about clients who are waiting ridiculous amounts of time for a decision on those initial claims," said Bill Rowe, general counsel at the North Carolina Justice Center, an advocacy group that lobbies on behalf of low-income people.

Rowe mentioned one applicant who had applied for benefits in September and still has not gotten a decision.

"They keep being told to call back in two weeks," he said. 

Cutting down on over-payments

North Carolina is not alone in its problems. In a 2013 report, the National Employment Law Project found a "chronically under-funded" national unemployment insurance system with many states experiencing "extensive backlogs, jammed phone lines and major interruptions of online claims systems."

At the same time federal law put a premium on expeditious payments, federal regulators have chided the state for paying claims to workers who are ineligible or who are trying to game the system. 

"For the annual reporting period ending June 30, 2013, North Carolina had an estimated improper payment error rate of 18.7 percent," U.S. Labor Department Acting Assistant Secretary Eric Seleznow wrote to Folwell in November 2013.

Data on the U.S. Department of Labor's website indicates North Carolina's rate is slightly lower – 17.4 percent – but still the second highest in the nation behind Nebraska.

That error rate translates into some $250 million improperly heading out the door. North Carolina officials dispute that number, saying that it is based on a survey of only a few hundred cases rather than an audit of all their data. They place the actual number of over-payments closer to $65 million per year. 

Whatever the number, Folwell said eliminating those payments became even more important when a new state unemployment law took effect July 1.

The division has always sought to recover fraudulent payments, he said. But over-payments in cases when the agency simply made a mistake or reversed an initial ruling were not recovered, he said. Under the new law, the division is required to recover those over-payments.

Efforts to recover that money can take a number of forms, he said, including garnishing wages once an unemployed worker finds a new job, putting liens on property or intercepting state and federal tax refunds. Many of the steps the state is taking – such as filling in gaps in the information employers submitted in response to a unemployment claim – are steps recommended by the U.S. Department of Labor in a 2012 letter. 

Rowe agreed that avoiding over-payments should be a priority. 

"The law is so strict that you're going after people when they didn't do anything wrong," he said.

However, he could not say whether Folwell's explanation that procedures used to avoid over-payments caused the first-time claim process to slow down.

"It's something we're concerned about and want to hear more about," he said.

22 Comments

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  • Rebelyell55 Feb 7, 2014

    I wonder if they're going to report that the number of Fraud cases ain't what they thougtht, and it's really a matter or training of the employees and correct use of the system to prevent over payment?

  • ALECarolina Feb 7, 2014

    Pat McCrory and his band of ALEC stooges are betting none of the folks they shafted voted for them last time. In the ultraconservative fascist utopia, no "Real Americans" are suffering as a result of the Bush Depression, they all have jobs, their houses are paid for, their vehicles are paid for, they have a 10 year supply of food in the house, and none of them are "takers" that needed unemployment benefits.

    COMING UP NEXT: Karma runs over the NCGOP's Dogma.

  • elmosbug Feb 6, 2014

    I have been unemployed since Nov. 17 and have not received anything yet. I was a cook and the owner decided to start doing the cooking himself. I live alone and that was my only income. Thanks to family I have struggled along till now, just barely getting by. It is completely uncalled for that this is taking so long. I am at the end of my rope. They are clapping and patting each other on the backs for unemployment being down but it really can be, its just not being process by ESC. I have called tried to check on any time frame for my claim to be release and they only say I will receive notification in the mail. I'm looking for work but jobs are limited in my area and I am not 18 anymore so not everyone wants to hire me. They would rather have that 18 year old. I just wanted my story to be heard since I have been waiting since November.
    Now I will continue to look for work, pray that I receive the letter from esc before I get an eviction notice! Good luck to all of you.

  • Pensive01 Feb 6, 2014

    View quoted thread



    it's only unbelievable if you forget what took place with the housing market due to the Great Recession. If you recall all the cases where banks refused to work with people who wanted to keep paying their mortgages and just up and foreclosed on them. Anyone who remembers that, as well as the much larger than usual fines that a number of banks got slapped with, such as with the examples you can read via the following link.
    http://www.ritholtz.com/blog/2013/09/top-10-bank-fines-post-2008-09-crisis/
    So bearing all that in mind I'd say it is not only believable, but highly probable as well.

  • Singlemalt Feb 6, 2014

    GREG69INNC: Sorry, but your story is really difficult to believe. If you were truly within 6 months of paying your house off the bank would have worked with you after getting that close. You are obviously just a Republican hater, just admit it. If they were paying out crazy $$$ amounts of monies in fraud claims everyone would want his job.

  • ALECarolina Feb 6, 2014

    Amen, Taffy......but consider that "The State", ISN'T,

    These jokers were imported to NC to carry out the regressive ALEC agenda for their corporate masters. If you were born here, and have lived here for decades like me, you know how strange it is to have a "Governor" appear in TV ads paid for by his rich peeps, telling us all how wonderful he is.

    The real puzzler is, if he's so popular with the majority of North Carolinians......why are they spending so much on ads in his FIRST TERM? (and only term, judging by pitchfork sales.)

  • Taffy Feb 6, 2014

    It has nothing to do with fraud, as that is a very small percentage of total claims. Its to discourage entitled residents of NC from applying. All they are doing is harming people who need some support after losing their jobs in an "at will" state. This state is doing the same thing with food stamps. I've never seen a state with such willful disgard for their residents!

  • greg69innc Feb 5, 2014

    I was unemployed and had to survive off of 175.00 a week due to the restructuring of the payment of UE. Consequently, the week before I returned to work full time; I lost my house with six months left to pay on it, and everything that was inside of it. I had to start completely over from scratch. This is one obstacle in my life that will take me a long time to get over financially. It is not just the GOP it is all of them that started this financial fiasco back in the early '90's that drove companies out of our country. Losing jobs to foreign countries has virtually eliminated our manufacturing sector which is the way our nation crawled out of the Depression years ago. Too many leaders made a quick buck at the people's expense the ones they serve and work for.

  • WRAL_USER Feb 5, 2014

    Yet another NC governmental department falling behind in doing their mandated duties due to bad GOP laws. The NCGOP is only out for themselves and cares not one bit for actually "governing" the state. I can't wait until we can vote all of these GOP clods out the door. I am looking at you Tommy, Patty and Arty... Bye Bye NCGOP!!!

  • faperrigo Feb 5, 2014

    "That error rate translates into some $250 million improperly heading out the door. North Carolina officials dispute that number, saying that it is based on a survey of only a few hundred cases rather than an audit of all their data. They place the actual number of over-payments closer to $65 million per year. " So this isn't a NEW problem. Just another issue of waste that you find as you dig into government.

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