Audit: West Virginia paid nearly $ 83 million in fraudulent unemployment claims
West Virginia paid nearly $ 83 million in fraudulent unemployment claims during the covid-19 pandemic, according to a recently released state audit.
This state was not the only one, notes the report. Under pressure to push back jobless claims, state agencies across the country have been hit with widespread fraud.
“Other states have also seen similar fraudulent activity in their unemployment insurance programs,” the West Virginia audit noted.
Lawmakers heard about West Virginia’s painful experience in interim meetings that began on Sunday. The legislative audit was presented to the Joint Committee on Government Operations.
West Virginia House Speaker Roger Hanshaw focused on how a lack of oversight resources contributed to the problem when he asked the first question during today’s audit presentation hui.
Auditors responded that the state unemployment agency was besieged with new claims, but also under pressure to implement a newly created federal unemployment program on the fly.
The state employment agency Workforce West Virginia agreed with the findings of the audit produced by the Performance Review and Research Division.
“Workforce West Virginia has received and reviewed the PERD report and agrees with the findings of the report,” Acting Commissioner Scott Adkins wrote.
Since the trend towards widespread fraud became clear, Workforce has set up a fraud unit, a cross-matching unit and an investigation unit in addition to developing partnerships with various state agencies to cross-reference data and identify the bad actors.
The legislative audit noted that Workforce could also have partnered with other state agencies – such as the state auditor’s office to verify whether claims filed on behalf of state employees were or the Division of Corrections to determine whether complaints have been filed for incarcerated persons. .
Before the pandemic, state unemployment agency officials said today, West Virginia had the fourth-lowest inappropriate payment rate in the country.
The fraud occurred after the pandemic began in early 2020, causing much of business activity to stop or slow down across the country. Unemployment has skyrocketed, with thousands of claims straining the government agencies that administer them.
The West Virginia audit noted that the total number of complaints handled by Workforce increased from 52,896 in 2019, the year before the pandemic, to 457,399 in 2020.
West Virginia has received nearly $ 1.8 billion from federal CARES legislation to cushion the effects of such widespread unemployment.
The CARES Act created the Unemployment Pandemic Assistance Program, which provides up to 39 weeks of assistance to categories of workers who are not normally eligible for regular compensation. These included part-time workers, self-employed workers and concert workers.
This program also allowed applications without the usual checks for regular unemployment benefits – allowing self-certification of eligibility.
The other aspect of federal assistance was the expanded federal pandemic unemployment compensation program which increased regular weekly compensation by $ 600 – later by $ 300 when the program was extended.
Workforce’s claims process was not designed for the onslaught of claims – or the structure that allows people to certify their own unemployment claims in the event of a pandemic.
“This sharp increase in complaints has overtaken WorkForce staff and the agency’s ability to properly review and process complaints,” the legislative audit concluded.
Before the pandemic, WorkForce manually reviewed regular jobless claims. But the audit noted that under these unprecedented conditions, “This manual review process could not keep up with the volume of complaints.”
Additionally, according to the audit, the state agency was under pressure from the US Department of Labor to pay claims as quickly as possible because so many people had lost their jobs during the pandemic.
Shortly after the state agency implemented the Pandemic Unemployment Assistance Program, it began to identify a high level of fraud in paying insurance claims.
Once WorkForce realized the level of fraud, it put security measures in place to try to stop it, the audit said. WorkForce deployed its fraud unit as well as automated fraud detection and prevention controls in spring 2020.
Eventually, the US Department of Labor and many other state agencies woke up to widespread fraud and added documentation requirements for people who self-certify, the audit noted.
The Office of the Inspector General of the Federal Ministry of Labor has estimated that the national figure for unemployment fraud could reach $ 87 billion.
The US Department of Labor has said much of the fraud is attributed to organized criminal networks that purchased identity information stolen in previous data breaches. The stolen data is then used to request services on behalf of others.
“A lot of the big problems we’ve been facing are criminal networks working out of state,” Chris McCauley, who heads the West Virginia unemployment office, told lawmakers.
WorkForce told legislative auditors banks across the country are working to unravel the fraud dollars recovered.
Last April, WorkForce reported that it had verified $ 121,986 as recovered. He expects an additional $ 3-4 million to be returned in 2021.
“With respect to funds that have been paid for fraudulent claims,” the audit said, “WorkForce stated that it has issued numerous letters of formal notice for the collection of fraudulent claim payments and that he was at various stages of the recovery process. “