180 targeted for unearned SC jobless overpayments

COLUMBIA, S.C. (AP) — South Carolina authorities say they are going after 180 people who fraudulently received at least $10,000 each in unearned jobless benefits.

The 180 are the first targets of the state's effort to clamp down on unemployment insurance fraud. The attorney general's office has alerted them to "potential criminal prosecution," said Mary-Kathryn Craft, spokeswoman for the state Department of Employment and Workforce.

The U.S. Department of Labor estimates that South Carolina improperly doled out $86.2 million in unemployment insurance last fiscal year, representing nearly 18 percent of all claims paid, according to a federal audit of 520 sampled cases. That compares to estimated overpayments of $94.4 million, or nearly 13 percent of payments, in fiscal year 2010; and $176 million — 22 percent — in 2008-09.

Improper payments spiked in South Carolina and throughout the nation as the Great Recession put more people on unemployment rolls, increasing the workload on staff at the same time that desperation spurred risk-taking, Craft said.

"Fraud has increased as more people are out of work and willing to risk committing fraud to get benefits," she said.

The biggest reason for overpayments in South Carolina is people continuing to collect after getting a job. That accounted for nearly half of the estimated $86 million improperly paid between July 2010 and June 2011, according to the U.S. labor agency.

That includes people getting a part-time job without reporting it, so their unemployment benefits aren't lowered as formulas dictate.

Last month, the state Department of Employment and Workforce announced it's working with the U.S. Labor Department's office of inspector general and the state attorney general's office to investigate and prosecute unemployment insurance fraud.

DEW has identified about $10 million in unearned payments through June 2011 to pursue as fraudulent. If the 180 people contacted so far pay back the excess they received, the state's unemployment insurance trust fund would recoup $2.5 million, Craft said.

The U.S. labor agency also is pursuing cases in which overpayments tally an additional $1 million. Indictments are pending, Craft said, without being specific.

Unemployment benefits vary based on a person's income in the lost job. In South Carolina, the average benefit is $239 a week. The maximum is $326 weekly.

The best way to catch overpayments is cross-matching wage and employment data with employers and agencies, Craft said. The state's unemployment agency is encouraging employers to participate in a database, she said, which involves entering new employees as they're hired through www.scnewhire.com .

Recouping overpayments could help South Carolina pay back federal loans quicker.

The state borrowed $963 million from the federal government to cover jobless benefits amid chronically high unemployment rates and the economic downturn. The state made its first payment in August and still owes more than $700 million. Officials hope the trust fund will be solvent by 2015.

An overhaul of the jobless benefits system that legislators approved in 2010 included a repayment plan, which increased unemployment insurance taxes for employers with the worst records for firing and laying off people. Legislators approved more changes last year. A law signed in June cut the number of weeks the jobless can receive state benefits from 26 weeks to 20, reducing the combined state and federal benefits from 99 weeks to 77. It also limited unemployment benefits for people in seasonal jobs.