Last year Idaho Department of Labor investigators identified nearly $8.9 million in fraud and benefit overpayments, an 82 percent increase over 2008.
Compliance Bureau Chief Michael Johnson says there is a direct relationship between the increase and the dramatic rise in benefits paid last year. The number of people who collected unemployment insurance benefits jumped nearly 43 percent from 81,000 in 2008 to 116,750 in 2009.
"More people are collecting and claiming regular and extended benefits than ever before so the numbers are up," Johnson said. "The longer some people are out of work, the more desperate they become and, unfortunately, the more likely they are to make mistakes or commit fraud."
In 2009, the department paid out a record $643 million in regular and federally funded extended and supplemental benefits. In 2008, the previous record payout at $247 million, investigators identified $4.9 million in fraud and overpayments.
Labor has consolidated the tip lines where callers can anonymously report unemployment insurance fraud into one toll-free number. All callers have to do is call (877) 540-8638 and leave the name, contact information for the person or business involved in committing the fraud and a description of fraudulent activities.
Penalties for committing unemployment insurance fraud range from steep fines to loss of future benefits. The state has the authority to garnish wages, seize assets and place liens on individuals, who fail to repay overpayments, and employers, who fail to pay taxes. The department also actively pursues criminal charges against serious offenders.
“We send people to jail," Johnson said. “Unemployment insurance fraud is a felony. My advice to those tempted to cheat the system is – don’t do it. The stakes are high and with all the technology at our disposal, the chances of getting caught are greater every day.”
Johnson said the department's automated computer system cross-references and checks information the agency receives from claimants and businesses.
People who defraud the system must repay the entire amount – plus penalties ranging from 25 percent of the amount to 100 percent of the amount for third-time offenders – and wait a minimum of 52 weeks before regaining eligibility to receive unemployment benefits.
Businesses committing fraud are subject to civil penalties and fines as well. Employers making false statements, failing to disclose facts or act as a party to filing a claim for fraudulent unemployment benefits will pay a penalty equal to 10 times the weekly benefit due an employee.
According to Johnson, the department historically has a 70 percent recovery rate for fraud and overpayments.
In 2009, the department's collection unit recovered nearly $4.2 million in fraud and overpayments, a 21 percent increase over 2008's $3.3 million.
"We expect that as the economy improves, the department's ability to recover the remaining balance will increase because people will be working and can repay what they owe," Johnson said.
Unemployment insurance claimants will also see less money in 2010. The maximum weekly benefit was reduced from $362 in 2009 to $334. This is part of the tax rate and benefit formula passed unanimously by the Legislature in 2005 and is expected to save the state more than $18.2 million in regular unemployment insurance payouts at a time when employer tax rates are at their legal maximum.
In 2007 the U.S. Department of Labor recognized Idaho's unemployment insurance program as the best in the nation. The state is consistently ranked as one of the best in meeting national standards for accuracy and timeliness.
"Protection of Idaho's Unemployment Insurance Trust Fund is a priority for our agency and vital to ensuring the money is there for people who are legally eligible to receive benefits," Unemployment Insurance Division Administrator Mark Whitworth said. "There can be no greater responsibility than being a guardian of the state's money, especially during a time when we are paying out record amounts."
How to Report Unemployment Insurance Fraud
If you know of an individual or a business that is defrauding Idaho's unemployment insurance system, you can report it anonymously by calling (877) 540-8638. Claimant fraud can also be reported on the Idaho Department of Labor Web site at labor.idaho.gov by clicking on the unemployment insurance link.
Types of Fraud
The most common types of fraud include:
Individuals
• Failing to look for work while receiving benefits;
• Not accurately reporting weekly earnings while drawing benefits;
• Continuing to receive benefits after returning to work;
• Not being able and available for work while receiving benefits;
• Continuing to collect benefits while on vacation; and
• Helping someone file a fraudulent claim.
Businesses
• Failing to file or filing false reports;
• Failing to report wages paid to workers;
• Making false statements or not reporting material facts about an employee’s separation from the job;
• Improperly classifying employees as independent contractors;
• Inducing, soliciting or coercing employees, or former employees, to file false or fraudulent claims for benefits; and
• Failing to submit an Idaho business registration form.