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February 2010

Labor Department Works to Catch Individuals Collecting Unemployment Benefits by Deceit


Go to fullsize imageDuring difficult times such as job loss, many Missouri families depend on the payment of unemployment insurance (UI) benefits to supplement their income and purchase basic necessities such as food, clothing, and utilities. The Missouri Labor Department wants to ensure that UI benefits are paid to those for which it is intended, and works to identify persons who fraudulently receive UI benefit payments.

To ensure the integrity of the state’s Unemployment Insurance Trust Fund – the fund which pays out UI Benefits to unemployed workers, the Labor Department has procedures in place to identify persons fraudulently collecting UI benefits, even after they return to work.

The Labor Department’s Division of Employment Security (DES), Benefit Payment Control (BPC) Unit is responsible for detecting UI benefit overpayments. An overpayment is the amount paid to a claimant which is more than what he/she is actually entitled.

Our data shows that approximately 70 percent of benefit overpayments are a result of claimants failing to properly report their wages earned during the weeks they apply for UI benefits. The claimant reports this data when he/she submits a weekly certification to the DES, which is required by law. On the weekly certification, claimants are either answering “no” when asked whether they worked during the week for which they are claiming unemployment; or they report earnings in an amount less than what was actually earned that week during the “claim week”.

In 2009, the number of overpayments increased by 68 percent over the previous year from 18,870 in 2008 to 27,612 in 2009. This is mainly due to a significant increase in claimants filing for UI benefits as indicated by an increase in the state’s total unemployment rate from 5.5 percent in January 2008 to 8.1 percent in January 2009. The current unemployment rate is 9.6 percent as of December 2009.

The BPC Unit uses three methods for detecting benefit overpayments – the Quarterly Wage Cross-match, the State New Hire Cross-match, and the National New Hire Cross-match. The success of each method is largely dependent on the assistance and cooperation of employers and other state departments through data sharing. The data sharing takes place when our office checks the records of claimants receiving UI benefits against the databases of employers, state, and national agencies. State and national new hire audits are mailed to employers each week which assists the BPC Unit match the files of newly hired people against unemployment records. Quarterly audits are mailed to employers and cross-matching of data takes place by matching the quarterly wage report against the number of weeks the individual claimed unemployment, and how much he/she earned in wages.

The Department has effective systems in place for detecting and collecting overpayments. In 2009 there were 27,612 overpayments established, which equates to $21,980,407.59. Last year, the Department recovered $18,081,439.20 in funds. Recouping these funds allows the Department to distribute payments to unemployed Missourians for whom UI benefits are intended.