Unemployment fraud on rise in SC

Greenville NewsOctober 31, 2013 

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— The amount spent on improper unemployment payments in South Carolina is going down and the number of fraud cases connected with unemployment is going up, according to federal labor records and officials.

The state Department of Employment and Workforce, which at one time didn’t refer any cases of suspected fraud for prosecution, now has 300 cases either under investigation or being prosecuted, a DEW spokeswoman says.

In 2011, the state made $86 million in what the federal government describes as improper unemployment payments. That went down to $54 million the following fiscal year and has dropped to $37.6 million for the calendar year 2012, federal labor records show.

“We have focused more on fraud detection with various types of wage cross-matches,” Mary-Kathryn Craft, a DEW spokeswoman, told The Greenville News in explaining the drop in overpayments. “And claims overall have dropped in the past several years.”

South Carolina paid 30,301 unemployment claims for the latest available week in October, she said, down from 84,027 for the same week in 2009. The peak number of claims filed in South Carolina, also in 2009, was 104,000, she said.

Claims also have fallen nationally, helping to lower the amount in overpayments and fraud across the country, said Jason Kuruvilla, a spokesman for the U.S. Department of Labor.

Kuruvilla said the agency has emphasized a number of strategies to fight fraud and overpayments that have helped, including data exchanges between states to improve claims verification.

Sen. Kevin Bryant of Anderson, chairman of the Labor, Commerce and Industry subcommittee that oversees DEW and unemployment claims, said he was pleased to see the numbers coming down. Bryant had been critical of the agency’s efforts last year in reducing fraud and overpayments.

“Even though $37 million is less than half of where we were, $37 million is a lot of money,” he said. “Regardless of where it’s going, it’s coming from the pockets of employers. And it’s not the fault of employers, who are actually paying the tax. So it’s still a really big problem. But we’ll keep seeing how we can get that better.”

Last year, a firm soliciting business with DEW did a sample audit and found payments to inmates, dead people and children, Bryant said then.

Most of the overpayments, however, involve recipients who get a job and don’t quickly report that income.

According to federal labor records, DEW was blamed for 25 percent of the overpayments, while the claimants were responsible for 43 percent.

The three-year improper payment rate estimate for the state, from 2010-2012, was 14.7 percent.

For the calendar year 2012, it was 9.93 percent, about midway among states, though federal officials caution against comparing state data because each state’s laws on unemployment vary.

The state also recovered $9.3 million in overpayments during the past calendar year, down slightly from the previous fiscal year.

John DeWorken of Greenville, who represents the temporary staffing industry, said the latest figures are good news.

“At the end of the day, it’s businesses who have to pay for the fraud that’s being committed and passed through the agency. So with the new director and new staff on board we’re excited they have a renewed commitment to try and curb fraud and we’re seeing results.”

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