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Employment Security uncovers fraud in its own offices

Posted October 3, 2014 6:00 p.m. EDT
Updated October 3, 2014 8:56 p.m. EDT

— 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.