Unemployment fraud cases more than double

Some workers collect benefits after they return to work, authorities say.

DAYTON — Ohio cases of unemployment insurance fraud have more than doubled since the recession began as an increasing number of claimants continue to collect benefits even after they return to work.

The state has recovered more than $42 million in improper payouts over the past five years, mostly from workers who lied about their employment status on unemployment benefits claims, said Ben Johnson, a spokesman for the Ohio Department of Job and Family Services.

“There are certainly more elaborate ways in which people attempt to defraud the system,” Johnson said. “But the most common way is that someone who is legitimately receiving unemployment benefits gets a job and is required to notify us that they are no longer unemployed, but they do not.”

Last year, the state recovered about $10 million in fraudulent payments, which was a small fraction of the $5 billion in total state and federal unemployment benefits paid to displaced Ohio workers.

But fraud has become an increasingly burdensome drag on the state’s unemployment compensation trust fund, which has already been forced to borrow money to keep up with payouts and still owes the federal government $2.6 billion, Johnson said.

“We don’t think fraud is endemic in the system,” he said. “But we’re not so naïve to think that fraud is not a problem, and we want to root it out because fraud jeopardizes the program for people who really need it.”

Ohio is not alone.

Unemployment fraud is so widespread that the U.S. Department of Labor has formed a task force to address the problem.

Ohio is one of 11 “high-impact’’ states — or states with the highest dollar amount of improper payments — participating in the task force, said Johnson, who noted the task force is part of a broader federal effort to reduce erroneous Medicaid, unemployment and food stamp payments.

“We are engaged with other states in focusing on how to reduce payments made after a claimant returns to work ... and how to reduce improper payments that stem from separation adjudications,” he said, referring to cases in which, for example, claimants lie about their eligibility by saying they were laid off when in fact they were fired for cause or quit.

Johnson said it’s no coincidence that in addition to Ohio the task force is comprised of states with some of the highest unemployment rates in the country, including California, New York, Pennsylvania, Illinois, Michigan, Florida, North Carolina, Texas, New Jersey and Wisconsin.

“Fraud increases and decreases along with the total number of claimants in the system,’’ he said. “We have seen an increase in the total amount of fraud as the number of people claiming benefits has increased, but we have not seen an increase in the rate of fraud.”

Still, the exploding case load of more than 300,000 people who claimed unemployment benefits last year has led the Ohio jobs department to boost the number of workers on its benefit payment control staff from 39 to 47 this year.

Investigators cross-reference new hires, tax records and other employment data reported to the state with the identities of people receiving unemployment benefits. They also rely heavily on tips from the public, which can be phoned in at (800) 686-1555.

But the sheer number of cases that come under review often allow scam artists to collect payments for weeks before they’re caught, and some are never identified.

“We don’t catch everyone,” Johnson said. “But when we find out people have been defrauding the system, that’s not something that we forgive. We pursue collections with whatever means are available to us.”

Once state officials identify a person receiving improper payments, their first step is to simply ask for the money back, Johnson said.

“If they repay the money, it never goes to the attorney general,” said Johnson, whose office is responsible for collection.

A spokesman for Ohio Attorney General Mike DeWine’s office declined to discuss the state’s collection efforts, which he described as confidential.

However, he said if repeated collection efforts fail, the attorney general’s office will refer those cases to local prosecutors.

Statewide, 150 people were successfully prosecuted for unemployment insurance fraud last year, according to the ODJFS.

Those cases in which fraudulent claims totaled $500 or more would be considered felony offenses carrying sentences ranging from six months to five years in jail, according to Greg Flannagan, a spokesman for the Montgomery County Prosecutor’s Office, who said local prosecutors couldn’t recall any recent cases of unemployment insurance fraud.

Contact this reporter at (937) 225-2437 or rtucker@Dayton DailyNews.com.

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