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As Concerns Over Unemployment Fraud Grow, Patterson Points to Auditor’s Warning



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Fresno resident Amy Brooks said she was denied unemployment benefits months ago. But she has recently received 24 pieces of mail from the state’s Employment Development Department.

The letters all have her address but list a different name and Social Security number. At least three contain debit cards.

“There’s no way this is a clerical error,” she said. “How can my address be linked to all of these people?”

Growing Concern Over Fraud

That’s what California officials are scrambling to find out as growing concerns have emerged over possible fraud at the state’s unemployment agency.

Jim Patterson“The auditor warned clearly for potential for waste fraud and abuse. We are now seeing what that waste, fraud and abuse looks like.” — Assemblyman Jim Patterson (R – Fresno)

California has processed a suspiciously high number of claims involving independent contractors, and there have been multiple reports of unsolicited debit cards from the EDD arriving in people’s mailboxes.

The agency has paid more than $71 billion in unemployment benefits since the start of the pandemic, processing more than 11 million claims as Gov. Gavin Newsom ordered businesses to close to slow the spread of the coronavirus.

California Has Outsize Share of Unemployment Claims

Thursday, the U.S. Department of Labor reported California had more than 405,000 pandemic unemployment assistance claims last week, accounting for more than half of all such claims filed in the United States during that time. Congress authorized the pandemic unemployment assistance program earlier this year to allow people not normally eligible to receive unemployment benefits, including independent contractors.

Michael Bernick, former director of the Employment Development Department and now an attorney at the Duane Morris law firm, called that a “ridiculously high percentage.”

“This may be the potential fraud given the very, very outsized, ridiculously outsized number of claims filed in California,” he said.

Gov. Newsom: ‘It’s a Top Priority’

On Wednesday, Newsom said he is “concerned about fraud in this space.” The state is working with local and federal authorities “to weed that out.”

“It is a top priority for all of us,” Newsom said.

Responding to an inquiry from the Associated Press, the Employment Development Department said it is aware of the letters and is “developing methods to stop and prevent such claims from being paid.”

“It’s extraordinarily unfortunate that fraudsters tend to become much more active during emergency situations like the current COVID situation,” the agency said in an unattributed statement.

Agency Under Enormous Pressure

Until recently, the biggest concern about unemployment benefits in California was the backlog of more than 1 million people still waiting to receive their money. Last month, the agency told lawmakers it is not answering 60% of the calls it receives for help, pledging to hire more than 3,000 people for its call center to keep up with unprecedented demand.

The agency has been under enormous pressure from lawmakers and the public to work through that backlog. But one of the reasons it takes a while to process claims is because the agency has to screen for fraud, Bernick said.

“That’s the trade off,” he said. “You can reduce certain procedural checks, but what you risk is a potential increase in fraud.”

Patterson Points to Auditor Warning

California Auditor Elaine Howle last month said the Employment Development Department was at high risk for waste and fraud, citing the large number of claims that have overwhelmed the agency. In the state Legislature, the Joint Legislative Audit Committee this week requested an emergency audit of the agency, including an analysis of the number and percentage of claims approved, denied, pending and backlogged.

Fresno Assemblyman Jim Patterson said Newsom’s administration shouldn’t have been caught off guard.

“The auditor warned clearly for potential for waste fraud and abuse,” Patterson said. “We are now seeing what that waste, fraud and abuse looks like.”