The Colorado Department of Labor and Employment is listing the names of individuals prosecuted for unemployment insurance fraud on its website in an attempt to help minimize unemployment fraud and abuse. According to the CDOL website, there were 18 prosecutions in the 1st quarter of 2012, resulting in judgments to recover $223,667.80 in fraudulently paid benefits.
This recovery, however, is just a drop in the bucket of the total amount of overpaid or fraudulent benefits paid out each year in Colorado. According to 9News, approximately $158 million, or 17%, of the total benefits paid in Colorado in 2010 were due to overpayments or fraud.
The numbers for 2011 do not appear better – the U.S. Department of Labor reports that through June 2011, Colorado’s improper payment rate was 17.5%, placing Colorado as the 7th worst state in the nation in terms of unemployment abuse:
- Indiana (43.57%)
- Louisana (43.55%)
- New Mexico (27.07%)
- Arizona (19.79%)
- South Carolina (17.90%)
- Virginia (17.77%)
- Colorado (17.50%)
— with the most efficient states being Vermont (4.54%) and Massachusetts (5.06%).
As I understand, not all of the improper payments are due to fraud. Instead, much of the problem lies with overpayments and clerical errors. For example, claimants who report they have found employment may still get mailed a benefit check even though they no longer qualify for benefits. This is because the CDOL’s computer systems are old and outdated, and it takes a long time for the information to update across systems. As a result, often times, claimants may not even know or understand that they received an “extra” benefit check from the government.
I first found out about the the woeful state of Colorado’s unemployment insurance program and the publishing of names of individuals prosecuted for unemployment fraud and when I attended a Colorado Association of Commerce and Industry (CACI) meeting in October 2011 with guest speaker Ellen Golombek, Executive Director of the Colorado Department of Labor. To Ms. Golombek’s credit, she appears focused on transparency and implementing needed change to improve the CDOL.
With new and improved systems and efforts to crack down on fraud and erroneous payments, taxpayers in Colorado will hopefully see some relief from the millions and millions of dollars lost each year in improper payments. Certainly, the public identification of unemployment fraudsters is one step forward to attempt to curb abuse.
In addition, Colorado offered an Amnesty Program for individuals to come forward and avoid penalties and prosecution by agreeing to pay back unemployment benefits that they should not have received in the first instance, whether by overpayment or by fraud. The formal Amnesty Program was available only for a limited time, and as I understand, expired as of December 31, 2011. However, the Colorado Unemployment Insurance Benefits Payment Control Hotline (303.318.9035) remains open, and provides an avenue for individuals to contact the Colorado Department of Labor and, depending on the circumstances, enter into voluntary repayment agreements to pay back overpayments and avoid facing penalties, interest and/or other prosecution. More information can be found on the Colorado Department of Labor (Unemployment Insurance and Overpayments) website.