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February 25, 2013

Pennsylvania looks to recoup some of the millions paid in improper unemployment benefits

HARRISBURG — Pennsylvania paid out more in improper unemployment benefits than any other state in the nation.

The federal Department of Labor estimates that the commonwealth issued checks totaling $690 million in 2012.

This is three-times more in improper payments than neighboring states, New Jersey, New York and Ohio.

The Department of Labor and Industry believes the federal data is inflated, but even if the state’s adjustment is made, Pennsylvania still paid about double the overpayments of the neighboring states.

In response to the problem, Pennsylvania has launched a number of fraud-busting strategies to prevent people from collecting improper payments and recoup the money from people who should not have received it, said Sara Goulet, press secretary for the Pennsylvania Department of Labor and Industry.

Earlier this year the Labor Department announced an initiative to crack down on county inmates who are improperly collecting unemployment while sitting in jail. But the federal data indicates that fraud by inmates and others who are not “able and available to work” only accounts for 1.5 percent of the unemployment fraud in Pennsylvania over a three-year period ending in 2012.

Much more common is fraud involving cases where people don’t bother looking for work or who have found jobs and continued collecting unemployment, which accounts for more than one-third of the overpayments. The other major problem involved episodes in which an employee was fired or quit and then obtained unemployment. This accounts for about one-quarter of the improper payments.

The first and easiest way to ensure that people do not get improper unemployment benefits after they get jobs would be that those workers would stop re-applying for benefits. However, if a worker continues to apply for benefits, the Labor Department will not realize that the worker should be bumped off the unemployment rolls until the employer files paperwork indicating that the person has been hired.

The Labor Department has begun to use a federal New Hire Database to more quickly identify when people who have been collecting unemployment land jobs, Goulet said. Using the new database helped the department decrease improper payments to no-longer unemployed workers by $30 million from fiscal 2011 to fiscal 2012, Goulet said.

Pennsylvania had not previously documented such a prevalent issue with people reportedly collecting benefits while not satisfying work search requirements, Goulet said.

The Labor Department has created an unemployment integrity task force to sort out how to solve some of those problems, she said.

In March, state Rep. Fred Keller, R-85, of Union County, plans to introduce legislation that would tackle the issue of uncertainty over whether an employee is qualified to collect unemployment.

The bill would spell out more clearly that a worker should not qualify for unemployment if he or she loses a job for violating work rules, threatening others in the workplace, showing up to work intoxicated, or repeatedly missing work without a legitimate excuse.

Keller said the intent of the legislation is to help make sure that people who lost their jobs through no fault of their own, can get benefits, but that employers and other workers are not expected to help provide benefits to people who have lost their jobs for improper workplace conduct.

While Pennsylvania paid out more in improper payments than any other state, the error rate in the state’s Unemployment Compensation program is not as high as the error rates in Indiana and Nebraska, Goulet said.

In addition to trying to do a better job of preventing benefits from going to people who don’t qualify for them, the state is garnishing federal income tax refunds to recoup improper benefits, Goulet said.

In November, the state began notifying nearly 18,000 people that they owed a combined total of almost $81 million and that the Labor Department would intercept their federal tax refunds. The state received $5.3 million this way in just two weeks, so far, this year.

(Email: jfinnerty@cnhi.com)

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