Part of unemployment fraud problem is lack of communication with employers, state lawmaker says

(The Center Square) – Fraud, delays and other issues continue to hamper the state’s unemployment system as more than 65,000 new claims filed last week alone.

That’s more than 18,000 more than filed the week before.

Illinois has paid out more than $17.7 billion in unemployment benefits to 1.3 million people since March 1. The Pritzker administration says that’s 16 times what was paid out in the entire year before. Illinois has borrowed billions from the federal government to pay the costs, something the business community fears will come back on them to pay.

It’s unclear how much of the $17.7 billion was paid out in fraudulent claims, though the Illinois Department of Employment Security has said nearly 297,000 instances of unemployment fraud have been identified.

“We have been in contact with the inspector general’s office with the U.S. Department of Labor and other law enforcement partners to investigate this matter,” Illinois Attorney General Kwame Raoul said Monday.

“We are by and large able to stop most fraudulent claims before they are paid and the state will continue to partner with USDOL Office of Inspector General, Attorney General Raoul’s staff, to work on recouping any stolen dollars,” IDES Acting Director Kristin Richards said.

Republican state Rep. Mike Murphy, R-Springfield, said there need to be public hearings about the state’s unemployment agency. An issue he said has come up time and again among his constituents is employers not being given the chance to challenge unemployment claims.

“It would nip this in the bud, and that is not happening,” Murphy said. “I can guarantee you that is not happening because I hear from employers all the time.”

He said a school district in his jurisdiction had fraudulent claims for some teaching staff that went unchecked by the district because they were never notified, among others.

“The claim we’re working on today is a state worker, so the state obviously wasn’t contacted because they wouldn’t have paid that money out,” Murphy said. “So my question is why aren’t we following that protocol?”

The ongoing logjam with IDES is also brewing more uncertainty for those caught up in the system.

Corynne Cooper, a general manager of a fitness club in Chicago, said she applied for benefits under the expanded unemployment program in May after struggling through March and April. That was during the stay-at-home order Gov. J.B. Pritzker issued closing gyms and other businesses the administration deemed nonessential.

Cooper got benefits and recertified every two weeks. She said she was later told by the state she was not eligible for the benefits and was told to pay the money back.

In an email last month, she said she was under the impression IDES would have had conversations with her employer before dispersing funds.

“They did not,” she wrote. “Instead they disbursed funds to me for 6 months prior to contacting my employer. Had they spoke with my employer upfront this would have been nipped in the bud much sooner.”

Even after a hearing on the issue in early November, she said she still doesn’t have certainty on how much she has to pay back or when it has to be paid back.

“This is something that directly affects my future and plans I had, retirement, it affects a lot of things and is just probably one of the biggest worries on my mind right now,” Cooper said in an interview Wednesday.

“When a claimant files an unemployment insurance claim through the state’s regular unemployment program, the chargeable employer receives notice and is asked to respond to the Department within 10 days if they wish to protest the claim,” a spokesperson for IDES said in an email. “Employers may protest a claim for various reasons, including that the employee was fired rather than being laid off, or that the employee is still currently working (which would make it a fraudulent claim). If an employer does not protest the claim, the Department moves forward with processing the claim and determining eligibility for the claimant with the information we have at that point.”

For some of the fraud that’s been detected, it’s been through the Pandemic Unemployment Assistance program, IDES said.

“Therefore, there is no employer on the other end who would protest the claim,” the department said. “This is the crux of unemployment fraud within PUA and unemployment insurance fraud at large, and is the result of a program hastily designed at the federal level, leaving states to build and implement a system on their own.”

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