State reports $24M in unemployment fraud occurred in 2020
Oregon is getting its first glimpse of the scale of fraud perpetrated against the state’s unemployment insurance system during the height of the pandemic.
A report released by the state’s employment department says it paid out more than $24 million in fraudulent claims in 2020, the first 10 months of the COVID-19 pandemic.
Oregon overall paid $7.4 billion to 581,000 people in 2020, meaning about 0.3% of the claims were fraudulent.
“The good news is that Oregon has not seen losses on the scale of some other states,” Unemployment Insurance Division Director Lindsi Leahy said.
Details of the fraud included:
$11.2 million to 3,335 people in regular unemployment claims.
$4.4 million to 385 people from the pandemic unemployment assistance program, which is for the self-employed.
$825,000 to 421 people from the pandemic emergency unemployment compensation program.
$196,000 to 135 people from the extended benefits program.
The state also said it overpaid 2,198 people $5.9 million and that it has recovered $1 million of that.
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A law passed in the 2021 legislative session allows the employment department for five years to wave overpayments caused by unintentional errors.
While other states have been forthcoming about the amount of fraud perpetrated, Oregon Employment Department acting director David Gerstenfeld until now has repeatedly declined to publicly discuss the amount of fraud that occurred on the state’s unemployment insurance system.
Gerstenfeld cited the department’s desire to not give fraudsters information about how to commit it.
The amount of fraud Oregon employment department cited in the report was low compared with other states.
In Washington, an audit by the State Auditor's Office showed the state lost $646 million to unemployment fraud in 2020, although the employment department disputed the amount reported as too high. In California, a reported $20 billion in fraudulent claims was paid through October 2021, accounting for about 11% of payouts.
Nationwide, $87.3 billion in fraud was estimated since the start of the pandemic to Sept. 30, 2021, according to a Department of Labor report.
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The Oregon employment department said its section that investigates fraud has increased to nearly 200 from 49 staff members before the pandemic.
“Fraud remains a significant threat to Oregon’s UI system, but we continue dedicating significant resources and efforts to combat it,” Leahy said.
In its report, the department cited factors that exposed it to greater levels of fraud including:
The boosts in unemployment benefits from federal programs made successful fraud more lucrative.
The extension programs made more weeks of benefits available, which also made it more lucrative.
The ability to backdate claims made it easier to collect more weeks at once.
The sudden job loss during the pandemic put pressure on the department to pay benefits quickly and frequent changes to programs also added pressure.
With the waiting week waived, it prevented a thorough review of claims.
The state said it is investigating more fraud cases from 2020 claims. It also said it won’t report 2021 fraud until later this year, citing ongoing attempts to defraud the state.
Bill Poehler covers Marion County for the Statesman Journal. Contact him at bpoehler@statesmanjournal.com or Twitter.com/bpoehler
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This article originally appeared on Salem Statesman Journal: Oregon reports $24M in unemployment fraud occurred in 2020
