WRAL Investigates

NC unemployment agency a 'broken system'

Posted May 7, 2012 6:00 p.m. EDT
Updated May 24, 2012 3:04 p.m. EDT

Division of Employment Security

— In 2011, the state investigated 6,077 cases of unemployment fraud and referred 286 of them, or about 5 percent, to law enforcement. The WRAL Investigates team found that a long-term problem at the state’s unemployment agency has been contributing to the fraud cases.

North Carolina’s unemployed depend on the Division of Employment Security for benefits and help finding work. Since the downturn in the economy, the agency has faced numerous problems, including late benefit payments, $28 million in over payments and a $147 million mistake when the division used state funds instead of federal funds to pay claims.

A deeper look into the agency’s performance numbers showed a bigger issue that has gone on for more than 15 years with no fix.

The state has problems determining whether someone is initially eligible for benefits and in tracking when those getting benefits are no longer eligible. In the last quarter, North Carolina had the worst scores in the country on both those measures, according to the U.S. Department of Labor.

The labor department has performed 120 quality checks on North Carolina’s unemployment agency since 1997. Of those, the agency has passed twice.

The latest report card on North Carolina’s unemployment office shows the agency failed five of the nine core measures that the labor department tests and got worse in four of the categories since the last test, including making first payments on time and detecting overpayment.

North Carolina Division of Employment Security spokesman Larry Parker says that, while the past 15 years of scores don't look good, the agency is looking forward. He released two corrective action plans Monday to show how the agency hopes to improve its scores.

“We do recognize that certain areas of our unemployment insurance program need some work,” Parker said.

Fraud becoming another issue

While the numbers raise concerns about customer service, fraud has become another issue. Unemployment fraud comes in two types – intentional and unintentional. One is a crime, while the other is classified as a mistake.

“We’re dealing with more claimants than we have in the past, because more people are able to qualify for benefits longer because of the federal extension. It’s giving more people the ability to commit fraud against us,” Parker said.

William Dyer is one example. He was one of three inmates charged in a scheme to collect unemployment while locked up in the Swain County jail. The unemployment agency found out about the case after a jail employee heard the inmates talking about the scheme.

“It’s a broken system,” said Rep. G.L. Pridgen, R-District 46, who represents Hoke, Robeson and Scotland counties.

Pridgen said he decided to seek reforms after hearing about a Scotland County case in which a woman pleaded guilty to illegally obtaining more than $30,000 in unemployment benefits. The lawmaker says he believes Gerri Clark got off too easy with misdemeanors.

“It is (stealing) to me, because you’re falsifying records and everything else to get monies,” Pridgen said.

Parker says new leadership at the unemployment agency and a working relationship with a legislative task force should improve North Carolina’s performance and help cut down on fraud.

“We take everything seriously,” Parker said. “We want folks to know we are not just sitting by on this. We are doing everything we can.”


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