Business/Finance

NJ stops $100 million in false unemployment claims

Tuesday, May 01, 2012

A new anti-fraud unit in New Jersey has caught at least $100 million in fraudulent unemployment claims over the last year, including those filed from overseas, the Department of Labor said Tuesday.

Labor Commissioner Harold Wirths told lawmakers at a budget hearing that the unit, led by a former FBI agent, stopped between 2,000 and 2,400 false claims per week last year worth at least $100 million.

"And that is a very, very conservative estimate," Wirths said.

The department is using new hire directories to determine if beneficiaries have returned to work, and payment is stopped when a match is found. Payments don't resume unless the claimant calls the state to explain any discrepancy.

Wirths said it's the only program of its kind in the nation, and false claims now average 1,650 per week.

"As you can imagine, most of them don't bother to make the call," he said. "They know they've been caught."

New software is identifying claims filed from outside the country. These include more than 1,000 claims over a three-week period that mainly came from Internet addresses in South America. Wirths said the software to track down foreign claims cost just $1,600 but saved the fund at least $8 million.

He also noted the unemployment fund has saved about $100 million since mid-2010 by changing the way benefits are paid to workers who lose a job because of misconduct. Before those changes, Wirths said, those who lost jobs because of severe misconduct were receiving almost as much in benefits as those who lost jobs through no fault of their own.

The state Labor Department will soon begin another program to stop claims made through stolen identities.

Employers and workers contribute to the state's unemployment fund, meant to provide a safety net for workers who lose their job. The fund was completely depleted as of March 2009 and has an outstanding balance of $880 million. Wirths estimated the fund will be replenished by May 2014.

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