Report: West Virginia unemployment fraud totals $83 million
PARKERSBURG, W.Va. (AP) — West Virginia paid about $83 million in fraudulent unemployment claims during 2020 because of the overwhelming number of claims processed by the state, a report shows.
Released on Sunday, the audit prepared by the Legislature’s Performance Evaluation and Research Division reveals that a vast majority of the fraudulent claims were paid with federal funds, while $800,000 was paid out of the state’s unemployment trust fund and is lost, The Parkersburg News and Sentinel reported.
The state’s unemployment claims are processed through Workforce West Virginia, a state agency funded by the U.S. Department of Labor.
“According to WorkForce, any employers’ accounts in the state trust fund charged for fraudulent claims will be credited for the charged amount during the next quarter,” Christopher Carney, a senior research analyst for evaluation and research division, told the News and Sentinel. “Since the fraudulent charges came out of the state trust fund, the state has lost those monies for future economic downturns.”
Unemployment numbers have recovered to pre-pandemic lows, but the number of claims during 2020 were overwhelming for WorkForce West Virginia, according to the News and Sentinel. The audit states that unemployment claims increased by 766%: from 52,816 claims in 2019 to 457,399 in 2020.
“When the pandemic hit, it challenged everything,” Jeff Green, deputy director of WorkForce West Virginia, told the newspaper. “The load was just beyond anything we could ever imagine was possible.”
The state received more than $1.8 billion from the federal Coronavirus Aid, Relief and Economic Security Act that was passed in March 2020. Workforce officials said the influx of unemployment claims and the billions provided to the state by Congress created an ideal opportunity for scammers to submit fraudulent claims.
Workforce “did not have sufficient administrative capacity, technology, fraud prevention and improper payment detection to properly process the large volume of claims from both unemployment programs,” the audit stated. “Other states also experienced similar fraudulent activity in their unemployment insurance programs.”
Prior to the pandemic, the agency manually processed unemployment claims, a system that became unsustainable as hundreds of thousands of West Virginia residents lost their jobs. Workforce didn’t implement automatic fraud detection systems until April and May of 2020.
The Legislature’s Joint Committee on Government and Finance, which oversees legislative agencies, received 22 fraudulent unemployment claims filed under the names of current and former employees, The News and Sentinel reported.
According to the U.S. Department of Labor’s Office of Inspector General, pandemic unemployment fraud nationwide could be as high as $87.3 billion.