RALEIGH — The Division of Employment Security continues to take aggressive steps to enhance the state’s unemployment insurance program.
DES has implemented the Treasury Offset Program, an initiative that allows the state to recover fraudulent overpayments through the IRS tax refund program. This is a major information systems upgrade effort by the Division that became operational this month.
“Recovering overpayments that occurred due to fraud is a priority,” said DES assistant secretary Dempsey Benton. “Prevention and recovery of fraud is paramount in making sure that the integrity of the unemployment insurance program is upheld. New initiatives such as TOP, various cross matching efforts and new legislative changes, will reduce fraud and will assist us in recovery of payments made due to fraud.”
Notices are being mailed to 19,253 unemployment insurance recipients and the division will be seeking up to $50 million in improper payments through this program beginning January 2013. It is noted that a portion of these funds will be recovered through an existing interface with the North Carolina Department of Revenue from state tax refunds. Also, a number of individuals will likely pay before December. It is estimated that the new TOP will yield at least $15 million additional collections in this initial effort.
Approximately 50 percent of the individuals will receive more than one notice, since a notice is generated for each fraud overpayment and they must be accordingly notified. Notices were mailed Nov. 1, and unpaid accounts will go to the IRS on Jan. 7, 2013.
New technology and other efforts.
DES continues to make use of technology as it becomes available. DES crossmatches with various databases in an effort to prevent the release of improper unemployment insurance payments. Currently, DES verifies all claimant information with the Social Security Administration and North Carolina vital records. In addition to these databases, DES performs weekly cross matches with the National Directory of New Hire. All employers are required to report newly hired individuals to the database.
Claimants, who have been reported as returning to work through this database, but have continued to file for unemployment benefits beyond their start date, are mailed notification requiring specific information regarding this potential return to work. Claimants are required to respond to this notice within seven days from its mailing. DES interrupts the unemployment insurance claims of those claimants who fail to provide a complete response within the alloted time fram.
For the period of June 1 through Sept. 10, 10,605 letters were sent to individuals giving notice to them. Of these, 4,878 cases resulted in a stopping of benefits and identifying $436,387 in overpayments to be collected. The division is adding five staff to handle the additional work resulting from these crossmatch findings.
DES is working with the NC.. Division of Adult Correction’s databases to perform a crossmatch with individuals who are incarcerated, with those who are receiving unemployment. The initial crossmatch identified 34 matches that found fraudulent payments of $71,396 which are now being pursued for recovery.
DES continues to battle fraud in other ways. In 2012, the division has begun to work with the federal office of Inspector General on certain fraud cases. To date, 41 cases have been referred to them with an overpayment of $766,166.
The 2012 session of the General Assembly made an important change to Chapter 96 of the General Statutes dealing with fraud. Unemployment fraud for benefits valued at more than $400 will be a Class I felony. For benefits valued at $400 or less, the offense is classified as a Class I misdemeanor. SB 828 also removed the statutory time constraints on fraud and non-fraud prosecution.
DES is meeting with the North Carolina Conference of District Attorneys to review the process for taking cases through the judicial system. They are working with DES’s benefit integrity and legal teams to enhance our capability in preparing cases for prosecution in state courts.
These initiatives, along with program changes and modifications of Employment Security Law will assist in stopping fraud and improve the unemployment insurance system in North Carolina.