ESC overpaid jobless benefits by $534M

Posted September 30, 2011 5:33 p.m. EDT

Employment Security Commission building

— A massive influx in the number of unemployed people in North Carolina contributed to more than $500 million in jobless benefit overpayments, according to a national study.

The U.S. Department of Labor recently audited all states for improper payments of unemployment benefits and found that the North Carolina Employment Security Commission paid out $534 million more than it should have between July 2008 and last June.

The state's overpayment rate of 8.86 percent was below the national average and was far below neighboring states, ESC spokesman Larry Parker said. South Carolina's rate was 17.92 percent, for example, while Virginia's was 17.69 percent and Tennessee's was 14.49 percent.

About 45 percent of the overpayments were because of fraud, with people collecting benefits after they had found a job and returned to work, Parker said. Another 34 percent occurred because businesses didn't submit the proper information about former employees, he said.

The ESC hasn't yet determined how much of the overpayments the state has recovered. The agency has beefed up its ability to identify and recover fraud and is working with 10 other states on a program to identify the best processes for such efforts.

The Labor Department's findings are just the latest problem for the ESC, which has been plagued since last year by computer glitches.

A state audit released in February found that the agency mistakenly paid $147 million in jobless benefits with state funds instead of federal money. Last fall, the ESC was roundly criticized for trying to dock the weekly benefit checks of thousands of unemployed people after overpaying benefits for months because of computer errors.

It's unclear whether any of the ESC overpayments cited in the national study were due to computer problems.