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LePage: State cracking down on Unemployment Insurance fraud

This is the weekly address delivered on October 1 by Governor Paul LePage.

In Maine, the price tag of unemployment improper payments and fraud amounted to approximately $6.5 million last year. That price is passed onto employers, who fund unemployment benefits through taxes paid on a share of each workers’ wages.

But the full cost is ultimately paid by all of us because when it is more expensive for businesses to add to their workforce, it stifles job creation and harms our economy as a whole.

Under the new leadership of Commissioner Robert Winglass, the Maine Department of Labor has stepped up efforts to prevent overpayments and fraud at the Department of Labor.

The agency has ramped up efforts to inform unemployment claimants about their responsibility under the law to be actively seeking work and willing and able to accept a job during the time that they are collecting benefits.

Claimants who aren’t doing the proper work search or who turn down suitable job offers can and will lose their unemployment benefits from this point forward. Additionally, they will likely have to return benefits already received.

The department is also working with other state and federal agencies to share relevant information about claimant eligibility to ensure erroneous payments are prevented and instances of fraud are caught as early as possible.

One of the most common types of benefits fraud involves people who continue to report that they are not working after starting a new job.

Existing cross-matches with the Social Security Administration and the Department of Health and Human Services new hire database are effective at catching this type of fraud: more than 450 cases were detected last year alone. Those activities will be expanded to create automatic cross-matches with a federal database of new hires and a Department of Corrections database of people who are incarcerated and are therefore considered ineligible for unemployment benefits.

The Department of Labor is also collaborating with the state law enforcement officials in their efforts to identify and respond to illegal claim activity.

Depending on the amount of benefits obtained fraudulently, unemployment fraud qualifies at minimum as a class D misdemeanor up to a class B felony for “theft by deception” under the law and the financial penalties are mandatory and steep.

For first offenders, the claimant is required to pay back all of the benefits fraudulently collected, plus a 50 percent penalty, in addition to interest charges that begin immediately to accrue on the debt.

But these efforts alone are not enough to prevent employment fraud from occurring.

Employers can do their part in helping to detect and stop potential unemployment fraud by promptly reporting the hire of new employees to the Department of Health and Human Services new hire line. Although this is already required under state and federal law, many employers are simply unaware of the requirement to call in new hires to the system.

The new hire system was initially developed to identify people who owed back child support.

Today, it is also used to find people who may be collecting public benefits—including unemployment—and working at the same time. The reporting process is easy and involves just a quick call to their new hire line at 800-845-5808.

Businesses have up to seven days to report new hires, but the sooner the better. The earlier new hires are reported, the faster fraud in the unemployment system can be detected and benefit payments stopped.

Employers are also encouraged to report instances of unemployment claimants refusing offers to work by calling 621-5100.

Turning down a job that is considered suitable employment could make a claimant ineligible for unemployment benefits. I’ve talked to many employers who have complained about unemployment claimants who turn down jobs just so they can keep their unemployment. But if they don’t report it when it happens, there is little the Maine Department of Labor can do about it later.

Unemployment Insurance is an important safety net for people who have lost their jobs through no fault of their own.  During the recent recession, the program helped thousands of hard-working Mainers as they looked for work following a layoff and helped alleviate the economic difficulties experienced by Maine communities as a result of high unemployment.

These recent efforts by the Maine Department of Labor will help strengthen the integrity of the program, so that it will continue to be there for those legitimately qualified in the years to come.

 

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One Response to “LePage: State cracking down on Unemployment Insurance fraud”

  • ShellyB:

    I wish there was a HOTLINE or website where you could report people who are abusing the unemployment funds. I know of a guy who is driving a tractor trailer for $160/day cash while he is collecting…

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