Insurance

Labor Department watchdog: Over $45 billion in insurance fraud claimed during pandemic

WASHINGTON (Nexstar) — A government watchdog says 1,000 people have been charged with unemployment insurance fraud for claims filed during the COVID-19 pandemic.

The Labor Department’s inspector general says there’s been more than $45 billion in potential unemployment insurance fraud since the pandemic hit.

Sen. Rick Scott (D-Fla.) says the government is to blame and Drake Hagner, visiting professor at George Washington Law, agrees.

“The amount of fraud is really surprising,” Hagner said. “What we’ve really seen is that our state workforce agencies have been underprepared to respond to a crisis like this.”

“You should be furious with your government,” Scott added.

Legacy computer systems mean that unemployment offices cannot easily detect fraud, such as when claims are filed in multiple states or when filed under the identity of someone in jail or deceased.

Problems with stolen identities have mostly affected low-income workers, because if they had their identities stolen, they weren’t able to easily fix the problem – many state unemployment systems are not compatible with mobile devices.

Scott acknowledges the problem but says there are other issues to address before spending money on updating computer systems, and Hagner says that ultimately states will need a federal funding to fix unemployment systems to prevent future fraud.

“We should have looked from the beginning who benefits from the system,” Hagner said.