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Audit finds CDLE paid $73M in potential fraudulent unemployment claims – Denver, Colorado

Denver, Colorado 2021-12-06 19:20:25 –

Denver – A State audit The Colorado Labor and Employment Department, released on Monday, paid $ 73 million. Fraudulent or potentially fraudulent unemployment allowance In the first 14 months of the COVID-19 pandemic, there were tens of millions more than the department identified earlier this year.

Colorado Office of State Auditor Report on page 74 We have identified many issues with the state’s unemployment insurance program and recommend how CDLE can fix them to improve payments, complaints, fraud hold, and other processes. All of these have been agreed by the department to work on and amend by various deadlines. Next two years.

Audit found There were about 8,200 possibilities or potential Fraudulent billing $ 73.1 million was paid between March 1, 2020 and April 30, 2021. This includes $ 45 million to $ 3,300 claimants with some fraud indicators and about 2,900 claimants with suspicious bank account information.

According to the audit, about 1,700 plaintiffs who were actually killed or imprisoned were paid another $ 9 million. This is another indicator of potential fraud.

These claims were paid because the CDLE was breached during the payment of the unemployment allowance as soon as possible in accordance with state and federal orders and the thorough investigation of the claims to prevent fraud at the front end. It turned out in the audit.

However, the department lacked a number of tracking mechanisms and failed to properly document complaints and fraud holdings, delaying payment of benefits for legitimate claimants by up to several weeks, while some. Fraudulent claims could also go through the verification process. audit.

“It’s important to protect taxpayer resources by taking steps to prevent and detect fraudulent claims,” audit manager Jenny Page said in a statement. “But it is also important to have an effective process in place to assist individuals who may have withheld legitimate claims as a result of these same fraud prevention and detection measures.”

On behalf of CDLE, the government, policy and public relations office said in an email statement that the ministry had prevented the payment of fraudulent claims of about $ 600 million.

“Nevertheless, this unprecedented challenge certainly highlighted opportunities for improvement,” said an unnamed spokesman. “The department has already begun work to implement many of the audit recommendations, and we are working hard every day to combat fraud and ensure that all legitimate claimants receive their interests. is.”

In 2020, 852,000 Coloradans received some sort of unemployment allowance totaling $ 6.9 billion. According to the report, in 2021, approximately 577,000 Coloradans received $ 4.6 billion in payments as of October. The amount paid in 2020 exceeds $ 400 million in benefits paid in 2019 before the pandemic by 1625%.

According to audits, 79% of unpaid claims as of mid-May this year have been found to be fraudulent because the claimant needs to take further action, or have been put on hold. It was put on hold because of it. claim.

Audits found that potentially over 8,000 fraudulent claims led to tens of millions of payments

Over 4 million unemployment insurance claims were filed by OSA during the 14 months from March 1, 2020 to April 30, 2021. Audits have revealed that approximately 8,200 of the claims paid are potential or potential fraud totaling $ 73.1 million.

In April of this year, CDLE said it had paid $ 19.3 million in fraudulent profits, but said the number would increase. In September, the ministry reported paying $ 29.8 million in fraudulent claims, according to an audit.

However, OSA analyzed the data available from CDLE and found additional fraudulent claims that may have been paid for. The report states that it was unable to provide the auditor with a breakdown of claims or payments identified as potentially fraudulent.

According to the audit, as of September, CDLE reported that more than 130 people were active. Criminal investigation into fraudulent unemployment insurance claims Approximately $ 35 million suspected of fraud has been recovered by banks and financial institutions and should be investigated and confirmed as fraud.

“Despite the many steps taken by the department to prevent and detect fraudulent unemployment insurance claims, our audits show more potentially fraudulent claims that the department did not identify, and the risk of fraud. We have identified the improvements that departments should make to properly mitigate and address them, “said the audit report. “Overall, we identified $ 73,123,710 for possible or potentially fraudulent claims paid by the department, but the department did not identify it as fraud prior to audit work.”

Audits have shown that CDLE does not have sufficient internal control to identify potential fraudulent claims for deceased people.Liveness check ID.me Identity verification system It was not installed until April. There was also a lack of imprisonment checks for people receiving pandemic unemployment benefits.

Audit warns that the federal government may require the state to repay the money paid for fraudulent claims to the federal government, and that the payment was a waste of taxpayer money. doing. As of late October, the state still has a $ 1 billion loan from the federal government and will continue to pay benefits from the Unemployment Trust Fund.

Audit reveals inadequate response to fraudulent activity

Auditors also found that it took an average of seven weeks to address the fraud hold issue when CDLE was documented. This was only 27% of all pending assistance requests. However, the department did not have a document stating that it had dealt with 73% of them.

The department told the auditor that it believed that MyUI + resolved the 192,000 and 196,000 fraudulent holds because MyUI + cleared them after being identified through ID.me, but the department did not document it. The audit found. In addition, the department documented only the date the request was made and the date it was resolved in 26% of cases, so it is unclear how long it took to resolve all fraud holdings. It led to the snowball effect.

“If the department does not resolve the fraud hold or provide timely support to the claimant, the legitimate claimant will not receive the unemployment allowance,” the department writes. “In addition, if the department does not provide timely assistance to the claimant, the claimant will contact the department more often and use the limited departmental resources available to assist all claimants. “

Auditors found that approximately 52,000 people submitted multiple support requests for fraudulent pending, including one who submitted 112 requests in 46 days.

This is because the department did not have a written policy, procedure, or process on how to assist the claimant, investigate fraud holdings, and document the process. Audits also found that better automated tracking and monitoring was needed.

Lack of tracking of call center complaints

However, because the department was late in dealing with complaints and holds, That call center This was also the case when the state worked to add hundreds of workers, primarily through contracts, to address the issue of the unemployment system. The audit was discovered at its peak in April 2020, with each customer calling the call center an average of 55 times for assistance.

Between April and June 2020, 95% of callers did not answer, were disconnected, or received a busy tone.

In the audit, CDLE did not properly collect or maintain data on complaints about call centers and unemployment processes, and despite the increased number of questions that virtual agents could answer, they did not take steps to resolve the complaints. I found out.

“If the department does not resolve the complaint, or does not require the contractor to resolve the complaint, we cannot guarantee that the issue will be addressed in a way that prevents recurrence,” the audit found. “… Unresolved complaints about profits can ultimately affect not only the claimant, but also the state’s economy if the individual does not have the funds to purchase the goods or services they need. “

The auditor has issued some recommendations to improve the shortcomings identified in the audit. Some of them have already been completed, others said they would be completed by March, and others promised to be completed by 2023.

This includes improving fraud detection and monitoring methodologies, investigating potential fraud claims, expediting customer complaint tracking and resolution, editing data, requesting help and holding fraud. It includes understanding how to respond in a timely manner.



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