The Alabama Department of Labor (ADOL) paid out unemployment insurance claims to dead people, inmates, and multiple addresses with 20 or more claimants during the pandemic, according to an audit released Friday.
According to an Alabama Department of Examiners of Public Accounts special report on unemployment compensation payments issued by ADOL from October 2020 to September 2022, the unemployment compensation payments for fiscal year 2021 totaled approximately $1.6 billion to 248,480 individuals. These payments included regular unemployment benefits as well as pandemic-related unemployment benefits, according to the report.
Unemployment payments dropped significantly in fiscal year 2022 to approximately $127.8 million to 62,943 individuals. According to the report, Gov. Kay Ivey ended federally funded pandemic unemployment compensation benefits in Alabama for weeks filed before and up to June 19, 2021.
According to the report, these pandemic unemployment compensation programs include as follows:
1. Federal Pandemic Unemployment Compensation that provided for an additional $300 weekly payment to recipients of unemployment compensation.
2. Pandemic Unemployment Assistance that provided benefits for those who would not usually qualify, such as the self-employed, gig workers, and part-time workers.
3. Pandemic Emergency Unemployment Compensation that provided for an extension of benefits once regular benefits had been exhausted.
4. Mixed Earner Unemployment Compensation that provided an additional $100 benefit to certain people with mixed earnings.
Unemployment Insurance (UI) is a joint state-federal program that provides cash to the unemployed. Each state administers a separate unemployment insurance program, but all states follow guidelines established by federal law, according to the report.
The Alabama Department of Examiners of Public Accounts found that ADOL sent unemployment payments totaling $5.3 million to 994 inmates from April 2020 to September 2022.
"A significant decrease in the number of unemployment compensation claims paid to individuals who were identified in the custody of (the Alabama Department of Corrections) can be seen in June 2021," the report states. "Alabama's participation in pandemic relief related to unemployment compensation was ended on June 19, 2021."
ADOL Secretary Fitzgerald Washington told 1819 News in a statement Friday that "this Special Report contains multiple inaccuracies and misleading data" and that "ADOL has requested a meeting with the Board of Examiners to review the report and make corrections."
The report also found that ADOL was issuing unemployment payments to individuals whose social security numbers identified the individual as deceased.
"302 claimants received 6,345 unemployment compensation benefit payments totaling $1,349,255.00 during the reviewed period of October 1, 2020 through September 30, 2022 despite being identified by the U. S. Department of the Treasury's Bureau of the Fiscal Service's Do Not Pay as deceased," the report states.
The state's auditors also found payments made to "numerous claimants" with the same mailing address. Many of these were also out-of-state addresses, according to the report.
The auditors found 55 addresses with 10 or more claimants per address. The report lists an apartment in Maryland with 119 claimants, a commercial building in Texas with 111 claimants, and an apartment in Virginia with 93 claimants.
"We reviewed unemployment compensation benefits payments made to claimants who had an address which was also claimed by at least twenty or more other claimants for payments issued between October 1, 2020 and September 30, 2021," according to the report. "We found instances in which numerous payments were made before the address duplication was detected by ADOL. Once the address duplications were detected by the ADOL the payments were stopped; however, the ADOL did not always calculate overpayments. This means that the ADOL has not taken appropriate actions to attempt to recover these payments."
The auditors said the "addresses may have been fraudulently provided to ADOL."
"We used LexisNexis Accurint for Government to research fifty claimants from the two addresses noted above with the highest number of claimants paid," according to the report. "LexisNexis Accurint for Government is a service that can be used to locate individuals, accurately verify someone's identity, and better detect fraud. It allows users to verify essential personal information such as an individual's name, address, and social security number. Our research found that none of the fifty claimants were or had been associated with the addresses shown in ADOL's system. This suggests that these addresses may have been fraudulently provided to ADOL. The ADOL has access to LexisNexis Accurint for Government. According to ADOL, the service is utilized by staff to verify a claimant's identity when filing a claim."
Washington told 1819 News that "with less than 24 hours notice before the publication of the report, ADOL has had no recourse to dispute the report's findings."
"Among other issues, the report fails to note that its findings of inaccurate payments to those who are incarcerated or deceased represent less than half of a percentage point of the entirety of benefits distributed (.38%, to be exact)," Washington said. "With national reports of historic unemployment fraud, and despite the tsunami of claims ADOL received, with reduced staff and reduced budgets, less than half of a percentage point of inaccurate payments is actually quite impressive. In fact, Alabama has the second lowest overpayment rate in the Southeast. Additionally, ADOL has determined that many of the claimants counted by the Examiners as deceased, are, in fact, living, and their social security numbers or other identifying information had been erroneously associated with others' information. In many cases, these conclusions can only be formed after diligent investigations by ADOL staffers and not by simply relying on a software program. Existing and well-documented issues regarding updating delays with other agencies' information databases are well known and can result in some errors not being detected until a much later date."
Washington said that "while any amount of fraud is undesirable, the simple fact of the matter is that it exists, and it exists in forms and volumes never before seen and are the direct result of the overwhelming volume of claims filed during the pandemic."
"Focusing on less than one half of one percentage point of incorrect payments amid these circumstances is disingenuous and misleading and discounts the hard work that ADOL staff has undertaken these past few years to mitigate loss and distribute benefits to those who are truly eligible to receive them," Washington said.
The report concludes that "the verification processes ADOL had in place during the review period were not adequate to safeguard the public resources that ADOL is charged with administering."
"Our review revealed that the ADOL did not have procedures in place to perform critical matches and verifications to ensure unemployment compensation benefit payments were only made to eligible individuals," the report states. "We recognize that the demands on the ADOL were significantly higher during the pandemic with multiple new pandemic related federal programs being administered; however, the problems with the ADOL's procedures and verification processes continued despite those programs ending. We utilized resources (Do Not Pay, Google, and Lexis Nexis Accurint for Government) that were available to ADOL to perform these comparisons and analysis that identified payments made in error. Additionally, ADOL has not been timely with its reactions to issues found and reported to them which are related to its internal controls and verification processes. This has resulted in payments being made to claimants who were not eligible to receive unemployment compensation benefits and ADOL not making sufficient attempts to collect payments made in error. ADOL should immediately implement verification processes to ensure that identified problems are being addressed so that erroneous payments do not continue to be issued."
To connect with the author of this story, or to comment, email caleb.taylor@1819News.com.
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