- The Washington Times - Wednesday, June 12, 2002

Overpayments or fraudulent claims made up about 8 percent of the $30 billion in unemployment benefits paid last year, the government says.
About $2.4 billion in benefits was overpaid to people last year, including $560 million stemming from fraud and abuse, Labor Department officials told a House Ways and Means subcommittee yesterday.
An audit conducted in Florida, Georgia, North Carolina and Texas revealed that nearly 3,000 claims totaling $3.2 million were paid to people using Social Security numbers that did not exist or belonged to dead people. Illegal aliens filed a large portion of those claims.
Another investigation by the General Accounting Office, the investigative arm of Congress, found that nine Social Security numbers were being used by about 700 people in 29 states to collect benefits. Seven of those numbers belonged to dead people.
In another instance, one person used names and Social Security numbers of dead people to create 13 fake companies and 36 fake workers to collect more than $135,000 from California, $65,000 from Massachusetts, $16,000 from Nevada and $15,000 from Texas.
Also, not all employers pay their fair share of unemployment insurance taxes. Some intentionally misclassify workers as independent contractors to hide wages or create shell companies to pay a lower rate.
Those errors are expected to increase this year as the nation's unemployment rate continues to hover close to a nearly eight-year high of 6 percent with thousands of people still out of work.
"These staggering numbers reflect just the overpayments we know about," said subcommittee Chairman Wally Herger, California Republican. "We can be sure more are out there waiting to be uncovered through better oversight."
One problem is that states, which administer benefits to the unemployed, place a higher priority on quick processing and payments than on verifying initial and continued eligibility, said Sigurd R. Nilsen, GAO director of work force issues.
The GAO's draft report on the unemployment-insurance program also found that the Labor Department, which distributes money to the states to pay for administrative costs, also does not focus enough on accuracy or provide sufficient incentives and sanctions to the states.
During the past decade, overpayments averaged $1.8 billion a year, reaching a high of $2.4 billion last year.
Only two states have access to the Social Security Administration's state online query system that can be used to verify identity, the GAO found.
States mainly rely on claimants to accurately self-report their citizenship status, and they generally do not verify the information with the Immigration and Naturalization Service. The Labor Department estimated that $30 million in overpayments last year were to illegal aliens.
Another problem is that employers do not always comply with state requests for information to determine eligibility for benefits.

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