Reid Newspapers launched a series of articles last month about the unemployment catastrophe happening in Oklahoma where fake unemployment letters, claims and payment cards cost Oklahoman’s millions of dollars.
The articles centered on hundreds of thousands of fake unemployment letters sent to Oklahomans and to Oklahoma businesses creating a breach of personal and business information including social security numbers and business identification numbers. All indications are the letters actually were printed, postage added and mailed from Oklahoma state offices with fraudulent data.
A month later, representatives of the Oklahoma Employment Security Commission (OESC), have acknowledged the costly mistakes and are taking measures to correct not only the expensive fake letters but the tolls the catastrophe has taken on real unemployment claims Oklahomans are deserving. All of this has resulted in long lines outside unemployment offices.
Ray Carter with the Oklahoma Council of Public Affairs follows up with outlying the costs and tribulations of the damaged system.
Ray Carter
Director, Center for Independent Journalism
During the spring COVID-19 shutdown, Oklahoma officials were swamped with fraudulent unemployment claims.
State officials have indicated the situation is better today, but one area employer said many bogus claims continue to be filed and the Oklahoma Employment Security Commission (OESC) appears unresponsive, at best.
“They are not taking calls from employers. They are not reading the submissions from employers,” Tracy Calamaio, owner of a chiropractic practice in Oklahoma City said. “And they’re paying a ton of bogus claims.”
Calamaio said eight non-employees filed for unemployment on her small business. Another individual who did work for the clinic should have been ineligible for unemployment benefits because she was fired for cause. Calamaio said the former employee stopped showing up for work and refused to provide a doctor’s note demonstrating any medical justification for the prolonged absence. OESC documents indicate that former employee filed for unemployment before being fired.
“She, literally, was standing in line to get unemployment while she was an employee,” Calamaio said.
Each quarter, employers file reports through the OESC’s website listing all employees, including workers’ Social Security numbers and salaries.
Calamaio questions why the OESC is not catching fraudulent claims by simply comparing employer filings with the data provided by claimants and then freezing payments when contradictions are identified.
She said an employee at the OESC, who was reached only after expensive effort by Calamaio, has indicated at least two fraudulent claims filed against her business have resulted in unemployment payments, along with payments to the former worker fired for failing to show up. But Calamaio said that information is not reflected on an OESC webpage which is supposed to provide employers the names of all individuals who have filed unemployment claims against the employer.
The unemployment-fraud issue is not unique to Oklahoma and has been fueled by a dramatic increase in benefit payments authorized by Congress in response to the COVID-19 shutdown. The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act temporarily increased unemployment payments by $600 per week in addition to existing weekly state benefits.
A recent study by the Foundation for Government Accountability noted “at least 68 percent of people receiving unemployment benefits are now paid more to remain unemployed than to return to work.”
The foundation warns that state unemployment systems “now are overloaded and more susceptible to fraud than perhaps ever before,” and the unemployment system has become “very lucrative for fraudsters who know many states probably lack the staffing and resources to combat fraud while the systems are overloaded with an unprecedented amount of claims.”
The report notes the U.S. Department of Labor’s Inspector General has estimated waste, fraud and abuse in the unemployment insurance (UI) program may total more than $26 billion nationwide for the CARES Act payments alone.
“For context, the entire unemployment system paid out about $26 billion in benefits during all of 2019,” the Foundation for Government Accountability report said. “This means taxpayers will likely pay more in improper unemployment spending from the CARES Act alone than they paid for the entire UI system last year.”
State officials concede fraud is a challenge, but said they are combating it.
“We have acted decisively to stop more than 100,000 fraudulent claims since the pandemic began in March,” Shelley Zumwalt, interim executive director of the OESC said. “We’ve also recovered more than $75 million in state money paid out to criminals. This agency is continuing to work closely with law enforcement to weed out these individuals and refer them for prosecution. We encourage members of the public, if they believe they have been a victim of fraud, to file a report with their local law enforcement agency, OESC via ui.ok.gov, and the Oklahoma Attorney General’s Office.”
The OESC sends employers a document whenever an individual files an unemployment claim, allowing employers to highlight fraudulent claims in response. But Calamaio said the OESC’s new website to report fraud has done little to improve the situation because it requires employers to know extensive personal information about individuals who, in many cases, were never employees.
“The problem with that website is you have to know their name, which is what’s on that form, you have to know their Social Security number, which is also on that form, but then you have to know their date of birth and address,” Calamaio said. “Well, if they’ve never been an employee, how are you going to know those things? So you can’t file it.”
Calamaio said one of her patients who owns a business has had roughly 70 false employment claims filed on his company.
As unemployment claims increase, she noted pressure grows to raise unemployment taxes levied on Oklahoma businesses to support the system. Calamaio fears Oklahoma employers will soon face higher taxes due to fraud, saying, “If a third of the fraudulent ones that I had were being paid.” Another study by the Foundation for Government Accountability showed the balance in Oklahoma’s unemployment trust fund declined nearly 12 percent between January 1 and April 16.