N.J. Anti-Fraud Effort Honored by Federal Government

Editor's Note: The following is a news release issued by the New Jersey Department of Labor and Workforce Development.

Launched in March as part of Governor Chris Christie’s strategy to eliminate government waste, an unprecedented anti-fraud effort at the state Department of Labor and Workforce Development (LWD) has already, in just five months, protected taxpayers against what is conservatively estimated at $56 million in fraudulent Unemployment Insurance payments.

LWD’s Division of Unemployment Insurance has been so successful with the new program that the United States Department of Labor’s Office of Unemployment Insurance bestowed its “Unemployment Insurance Innovation Award for Integrity” to the State of New Jersey on October 19, 2011.

“Our anti-fraud effort has been focused on stopping fraud in Unemployment Insurance before it happens by making sure people do not collect money they are not entitled to get. We have an obligation to protect the money that taxpayers have paid into the Unemployment Insurance system and to make sure those who collect are rightfully eligible,” said LWD Commissioner Harold J. Wirths.

LWD reorganized its Fraud and Risk Prevention Unit earlier this year and became the only agency in the nation to use an aggressive campaign of cross matching government hiring data to prevent the most common form of Unemployment Insurance fraud:  payments to individuals who are no longer entitled to benefits because they went back to work.

“When this administration came into office, we realized that a person could fraudulently collect Unemployment Insurance for weeks before it would be detected, and then the state would have to spend time and money trying to track down the person to recover what we could,” said Wirths.

Between April 16 and Sept. 3, the anti-fraud program prevented an estimated 35,000 people from fraudulently collecting unemployment payments after they started a new job. Before the new program was implemented, the state would not be able to discover someone collecting while employed until employers filed quarterly wage and new-hire reports with the LWD - and those reports would not report out-of-state workers.

“Before now, someone could improperly collect Unemployment Insurance for several weeks before they would be found out. Now, we catch them in the first week,” said Ronald Marino, Assistant Commissioner of Income Security at LWD.

If the 35,000 people detected as improper claimants between April and September had been free to collect an average of $400 in weekly Unemployment Insurance for just four-weeks each, they would have cost the system for $56 million.

“When people try to certify on-line or by phone for Unemployment Insurance benefits in our new system, a flag will go up if the system detects a new hire date. When that happens, the person is required to speak with a representative to resolve the discrepancy or the person will not be paid,” said Marino.

The 35,000 people detected by the new system were people determined to be filing fraudulently.

The cross-checking on new-hire dates is just one of several new programs launched within LWD’s revamped Fraud and Risk Assessment Unit, which is now headed by a former Federal Bureau of Investigation Special Agent.

This past summer, LWD also began using what is known as the Unemployment Insurance State Information Data Exchange System, which automates and standardizes the collection of information from employers or their administrators on the circumstances under which an employee left a job.

This has enabled LWD to prevent another common cause of Unemployment Insurance overpayment: employers failing to properly indicate that a worker was terminated for cause or voluntarily quit, which would disqualify them for Unemployment Insurance compensation.

“We understand that as we continue to recover from this recession, New Jersey workers have to make every dollar count and our goal is to aggressively shut down those people fraudulently collecting benefits and to protect the Trust Fund,” Wirths said.