Auditors: Inmates illegally collecting unemployment
December 14, 2012
Legislative auditors say the Nevada Employment Security Division could be paying up to $5 million in jobless benefits to Nevada prison and jail inmates over the last three years, based on a sampling of state prisoners and Washoe County Jail inmates that showed 67 of them were illegally getting such benefits.According to Deputy Auditor Dan Crossman, the payments to the 67 inmates totaled some $241,000. That included unemployment benefits paid to two inmates for more than a year before they were identified. The sample results were then factored into a formula accounting for all inmates in state and county jails around Nevada to come up with the $5 million estimate.Deputy ESD administrator Kelly Karch said the problem is being fixed, adding that Social Security records will soon identify any claimant who is housed in a prison or jail nationwide. He said the new system will automatically block claims in those cases and generate a letter telling claimants to show up in person at an ESD office to apply for the benefits.Assemblywoman Maggie Carlton, D-Las Vegas, questioned whether the inmates were those awaiting conviction or only those convicted. Crossman explained that the law requires a person be available to go to work at least four days a week to claim benefits for that week and they’re not available, whether convicted or not, if they’re behind bars.Inmate payments weren’t the only improper or fraudulent payments auditors found. Crossman said the federal Department of Labor says Nevada’s unemployment insurance program has an improper payment rate and the state may be losing $29.5 million a year to undeserving claimants. The big loss is to people who continue to claim benefits after getting a new job. In many cases, Karch said a person may not cancel a benefit claim until getting a first check one or two weeks after being hired. The law requires the claim be shut down as soon as the individual is hired. Karch said the division is trying to fix that problem by getting employers to report new hires immediately.“It’s up to employers to report the new hires,” he said. “It’s important for the employers to cooperate.”In addition, the auditors said $40,417 in payments were made to a few claimants who were deceased. Auditors found only 15 deceased claimants in the 97,000 total claimants in ESD’s system and only three of those received payments after their deaths.Karch told the audit subcommittee he and his staff are doing a variety of things to reduce improper payments and prosecute fraud. He said in cooperation with federal officials, the agency broke up a ring that had illegally collected some $4.2 million in claim payments. Three of the people in that ring are now in federal prison.He said agency staffers are also beginning to attach liens to federal tax returns of people who owe money to the ESD, and he’s proposing legislation to make garnishing wages much easier to get back improper payments.Karch said he is actually very surprised at how little improper payments and fraud were found given the extreme load on the division through the four-year recession. He said at one point, the ESD was paying benefits to 142,000 people a week. Over the past four years, he said ESD has paid out some $6.5 billion in benefits.Lawmakers on the committee unanimously accepted the audit report.