Both Gov. Mike DeWine’s administration and state lawmakers are moving forward with some fixes to Ohio’s unemployment systen, but there’s caution about how to proceed.
File photo | The Lima News
COLUMBUS – State leaders are trying to solve seemingly contradictory problems with Ohio’s unemployment benefits system: how can they tighten anti-fraud security without exacerbating delays in paying out genuine claims?
Ohio’s unemployment system was beset with both problems during the coronavirus pandemic. An unprecedented spike in unemployment claims led to maddeningly long delays in processing jobless benefits, and the state paid more than $1 billion in fraudulent claims (mostly for federal COVID-19 unemployment benefits, which had few verification rules).
While the number of claims – both legitimate and fraudulent – has fallen off as coronavirus cases have receded, both fraud and obstacles for legitimate filers remain issues today, state leaders said Thursday during a hearing by a legislative committee studying ways to improve Ohio’s unemployment system.
Both Gov. Mike DeWine’s administration and state lawmakers are moving forward with some fixes, but there’s caution about how to proceed.
“We don’t want the system to be so locked down as to create an undue burden on claimants,” said Matt Damschroder, director of the Ohio Department of Job and Family Services, which runs the state’s unemployment system. “But at the same time, we don’t want to go back to where we were of having it so open that we have fraudulent payments going out left and right.”
Anti-fraud
Between the start of the pandemic and last August, ODJFS paid a total of about $1.1 billion in fraudulent claims, according to a draft report from the Ohio Unemployment Compensation Modernization and Improvement Council. Of that, $1 billion was federal pandemic benefits, while $104 million was for traditional unemployment benefits.
To address the fraud problem, state lawmakers are now advancing legislation – Senate Bill 302 – that would tighten verification rules, including:
— Requiring ODJFS to use tax filings to verify employees’ income if employers don’t respond within 10 days
— Allowing ODJFS to access photos from the state’s driver’s license database to help verify applicants’ identities
— Mandating that if special federal unemployment benefits are offered in the future, as they were during the pandemic, ODJFS must establish a verification system for applicants using state tax information
SB302 passed the Senate on Wednesday and now heads to the House for consideration. The legislation is supported by a number of business groups, including the Ohio Chamber of Commerce, whose members pay an employer tax used to fund Ohio’s unemployment benefits program.
ODJFS has already taken a number of steps to combat fraud on its own, including spending millions on contracts with outside security firms and bringing in banking and insurance executives to provide advice on anti-fraud efforts.
ODJFS flagged a total of 4 million benefits claims for potential fraud during and after the COVID-19 crisis, Damschroder said, but department staff has reduced that number to about 471,000 right now.
“There’s still work that we have to do in terms of cleaning up pandemic-era claims activity,” Damschroder said. “But I think that, overall, shows the volume of the work that the (ODJFS) team has engaged in over the last two years.”
At the same time, Damschroder warned council members that his department is preparing to again include anti-fraud information leaflets with every 1099 tax form ODJFS sends to Ohioans it recorded as receiving unemployment benefits in 2022. The leaflet lists instructions on what recipients should do if they didn’t apply for any benefits and received the 1099 only because scammers used their stolen personal information to obtain benefits.
“There will be a universe of people, beginning this upcoming calendar year, who for the first time will learn benefits were claimed in their name,” Damschroder said.
While most of the fraudsters are overseas in countries such as Nigeria, state unemployment officials have also tried to do what they can to recover stolen benefits money – including by working with banks to determine deposits that came from claims determined to be fraudulent. Damschroder said other states have contacted ODJFS to ask for advice on improving their own anti-fraud efforts.
Ohioans who were accidentally overpaid money can ask ODJFS for a waiver to avoid having to repay the money. So far, Damschroder said, about 45,000 such waivers, totaling $300 million, have been granted, while about 53,000 waiver requests have been denied – primarily because applicants never responded to ODJFS requests to verify their identity and employment. Roughly 42,000 waiver applications are still pending, he said.
Solving delays
The other side of the problem is many Ohioans who file legitimate unemployment claims are still encountering delays or difficulties getting their claim approved and receiving payments.
The draft report from the Ohio Unemployment Compensation Modernization and Improvement Council describes that, during the height of the pandemic, many people waited weeks or months to have their claim processed and faced exorbitant wait times, unknowledgeable or rude call-center staff, inconsistent instructions on how filing a claim, language barriers between non-English speakers and staff, and having no way for the public to lodge complaints with ODJFS.
There have been several reasons for the delays. The number of claims filed spiked so quickly that ODJFS didn’t have enough workers to handle the tsunami of claims and phone calls. ODJFS has since hired more workers and contractors to handle the workload.
Also, state officials are in the middle of a years-long upgrade to the unemployment office’s circa-2004 computer system. That upgrade is now on hold indefinitely because federal officials indicted top officials with the company hired to replace it.
Another issue was that many legitimate claims were flagged on suspicion they could be fraudulent, leading them to be held up until state workers could verify they were genuine.
“I still get calls at my office today of problems that they’re still having with the system,” said state Rep. Lisa Sobecki, a Toledo Democrat who serves on the council, during Thursday’s meeting. “And some of these are the same problems that we talked about during the pandemic.”
Critics of Senate Bill 302 agree it would help keep fraudulent claims from clogging the system, but they argue it would do nothing else to help make sure Ohioans get their unemployment benefits more quickly.
Zach Schiller, research director for Policy Matters Ohio, told the council on Thursday that even as recently as last October, almost a quarter of benefits applicants didn’t receive their first payments within three weeks. By comparison, Schiller said, in the weeks before the coronavirus crisis arose in March of 2020, 87% of applicants were paid within 21 days.
Damschroder told the council that number is now greater than 85%.
Schiller also noted that, according to ODJFS statistics, 53% of the more than 96,000 unemployment benefits applications approved between January and mid-October were flagged for potential fraud. “It seems like an exceptionally high number, and it makes you wonder about the criteria being used to flag these claims for fraud,” he said.
The council’s draft report includes a number of recommendations to make the benefits claims process more transparent to Ohioans, including:
Evaluating whether ODJFS can notify people when they call how long the current wait time will be to talk to someone
Looking at creating a system allowing applicants to track in real time where their claim is in the process, and what obstacles remain
Expanding frequent caller, call-back, and other services to proactively reach out to constituents.
