Archived Story

DES working to reduce fraudulent claims

Published 8:25pm Tuesday, December 4, 2012

The N.C. Division of Employment Security continues to make changes to strengthen the state’s unemployment insurance program, including trying to reduce the number of fraudulent claims for unemployment–insurance benefits.
In a report released to members of the state’s legislative task force on unemployment insurance, DES outlines ongoing management improvements and upcoming changes to the unemployment insurance program that includes potential felony charges and revised weekly certification questions.
Neal Anderson, supervisor of the DES office in Washington, said DES is placing emphasis on detecting and reducing unemployment-insurance fraud.
“Fraud investigation is not handled through the local office. We will take reports of fraud and forward it to Raleigh,” Anderson said Tuesday.
DES also takes reports of suspected fraud online at
“While the division is working to enhance the methods for which we detect fraud, there has to be a tougher penalty for those found guilty of fraud,” said DES Assistant Secretary Dempsey Benton. “The General Assembly passed legislation this year to do this. The felony charge will hopefully deter some of those individuals who choose to fraud the system. Adding more questions to the weekly certification process enhances the integrity of the program and will add more responsibility for the claimants when answering them.”
As of last Saturday, if the amount of benefits improperly obtained is more than $400, the claimant as well as any person providing assistance would be charged with a Class I felony. An individual may be punished by imprisonment in the state’s prison system from three to eight months and a fine also may be assessed.
If the amount of benefits obtained is $400 or less, the claimant as well as any person providing assistance would be charged with a Class 1 misdemeanor. An individual may be punished by imprisonment from one to 120 days and a fine may be assessed.
The U.S. Department of Labor recommended to the DES that the number of weekly certification questions be increased. The number of weekly certification questions will increase from six to 14 later this month. Newer questions include claimants answering if they understand that they may be prosecuted in a court of law for giving false statements or withholding information and whether or not they have quit a job since filing for benefits.
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 DES that became operational last month.
“Recovering overpayments that occurred due to fraud is a priority,” said 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 DES 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.

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