State overpays millions to jobless

Responsibility for improper unemployment compensation over payments in Ohio

Root Cause for overpayment Percentage

Claimant only: 50.74 percent

Agency only: 25.41 percent

Employer only: 9.08 percent

Claimant and agency: 5.30 percent

Claimant and employer: 3.82 percent

All other: 1.55 percent

Claimant, employee & agency: 0.80 percent

Source: U. S. Department of Labor Benefit Accuracy Measurement (BAM), which looks at a sample of unemployment claims in each state, fewer than 500, and extrapolates findings.

Our reporters examined federal and state unemployment data to determine how area counties fared in over paying benefits as well as who was responsible for the erroneous payments.

A Dayton Daily News analysis of state and federal unemployment compensation data found one in five claims filed by Montgomery County residents resulted in an overpayment in 2012, with fraud totalling just over $2 million.

Last year, out-of-work Ohioans collected nearly $2.3 billion in state and federal unemployment compensation. There were over payments on more than 110,000 claims totalling $87.3 million, according to state data. One individual may have had multiple claims.

In 2012, the state recovered about $43 million in overpayments, which included some from prior years.

“The debts are never forgiven. We are always going to be trying to collect them,” Bruce Madson, assistant director of the Ohio Department of Job and Family Services said.

Unemployment, unlike other Job and Family Services programs, is a state operation with no county involvement, but Madson could not say why some counties had a higher percentage of claims with over payments than others.

He did say the overpayment problem, overall, began during the recession when the state agency rushed to deliver timely benefits to tens of thousands of Ohioans who were out of work.

“Not only were we slammed with people applying for benefits, but employers were slammed with (work verification) documentation,” Madson said. “If an employer didn’t get back timely, we made the determination with information we had. We were more likely to make improper payments.”

And, the overpayment issue isn’t unique to Ohio.

The U.S. Department of Labor’s Benefit Accuracy Measurement (BAM) looks at a sample of unemployment claims in each state — fewer than 500 — and extrapolates the findings to estimate the total number of inaccurate payments. Ohio ranked in the top tier of the county with 15 other states in that report with improper payment rates estimated at 14 percent or above, for the three year period between July 2009 to June 30, 2012.

Ohio officials disagree with the ranking.

“While we know that we do not identify every overpayment, we believe the BAM extrapolation is too high,” Ben Johnson, spokesman for ODJFS said.

The extent of Ohio’s over payments became evident, when recession-era data became available. With more than $5 billion in benefits disbursed, over payments statewide totalled $141 million in 2010, more than 2.5 times the 2008 figure.

The Ohio Attorney General’s Office collects outstanding debts owed to state agencies. When fraudulently obtained benefits are recovered, they are deposited back into the Unemployment Compensation Trust Fund.

Many over payments are the result of honest mistakes, Johnson said. Even if unemployment benefits are disbursed in error, over payments must be paid back.

“In difficult economic times there is more temptation for individuals really in desperation to take benefits they many not be eligible to receive,” Madson said. “We don’t want to drive people into bankruptcy. Unemployment is about sustaining families. We may not be able to collect until the next time a person applies for benefits.”

Now as Ohio’s economy recovers, Madson said the emphasis at ODJFS has shifted to reduce over payments. The state is also getting more aggressive in prosecuting fraud, which was a factor in 17,740 of the Ohio claims totalling $30.5 million.

Separate indictments were unsealed in January in the U. S. District Court for the Southern District of Ohio charging 10 individuals with collecting $151,492 in fraudulent unemployment claims, including Erik L. Alexander and Ralph I. Griffin III of Dayton. The charges allege the men were not entitled to unemployment benefits, because they were employed at the time.

Those cases are pending.

“We’re taking steps to tighten the system,” Madson said.

The state also has applied to the Internal Revenue Service to crack down on Ohioans who obtain benefits fraudulently by withholding federal income tax refunds to those who fail to return an overpayment. That policy could be in place by March, Madson said.

Looking for work is a requirement to receive unemployment benefits. Self-reported, job search information provided by claimants also is being audited more often.

“If a person has been on unemployment for a long time and their job search has been fruitless, after months they may say they are doing something they are not,” Madson said. “They will actually have to produce written documentation that we can cross check.”

A goal of ODJFS is to reduce the number of weeks claimants receive benefits, because they got jobs.

The state legislature is also exploring changes.

Ohio House Bill 2 would require all applicants for unemployment insurance to register with OhioMeansJobs.com prior to applying for benefits. A resume could be submitted to a searchable database and when the state learns of a job that matches a person's skills, they would be notified.

The legislation also requires claimants to go to their county job center by the eighth week of unemployment benefits. Currently, only individuals receiving federally extended unemployment benefits must visit a job center. These requirements aim to make sure applicants and recipients are maximizing job search opportunities.

“We want to minimize the weeks people are unemployed,” Madson said. “There are a significant number of people who are only on unemployment a few weeks. Another group is more likely to take it all the way through to 26.”