LOUISVILLE, Ky. (WDRB) – Indiana reported a surprising jump in initial jobless claims last week, but a state official suspects a “huge percentage” were filed by fraudsters trying to game the state’s unemployment system.
Indiana reported 53,364 first-time claims for jobless benefits under the state’s regular unemployment insurance program during the week ended June 27, according to U.S. data released Thursday. That’s an 82% increase from the prior week and the highest weekly figure in the Hoosier state since late April, when the pandemic restrictions were taking hold.
Josh Richardson, chief of staff at the Indiana Department of Workforce Development, which administers unemployment insurance, said the big jump in first-time jobless claims doesn’t make sense given that the state has seen a general decline in ongoing jobless claims as people go back to work and no significant increase in employers reporting mass-layoffs.
“We think there is a lot of evidence here in recent weeks that Indiana has become sort of the focal point for fraudulent claims for unemployment benefits,” Richardson told WDRB on Thursday.
Richardson declined to detail that evidence other than the broad economic indicators that are incompatible with rising jobless claims. He said suspicious claims are being investigated.
Richardson also declined to say how many cases of fraud the state has found and how many claims the state has flagged for potential fraud.
But Richardson would “guess” that Indiana’s legitimate initial jobless claims would be “at or below” the 22,000 to 23,000 weekly figure the state saw in late May and early June, meaning more than half of the 53,364 jobless claims Indiana logged last week could have been illegitimate.
“It’s a huge percentage that I think are potentially (fraudulent) out there,” he said. “Only upon further analysis will we really be able to tell, looking back, ‘Yes, those were fraudulent.’”
Richardson noted that unemployment insurance fraud is a known problem, citing Washington’s acknowledgment that it paid as much as $650 million in fraudulent claims during the initial weeks of the pandemic.
Kentucky also reported an increase in regular initial jobless claims last week, to 30,446, but that figure isn’t out of line with Kentucky’s claims during the last few weeks.
"The Office of Unemployment Insurance will continue to monitor the numbers closely and is reviewing the increase in claims," said Marjorie Arnold, chief of staff of the Kentucky Labor Cabinet, in an email.
Nationally, first-time claims decreased slightly to about 1.4 million.
Indiana’s Richardson said the federal government’s actions to make unemployment insurance more widely available and more generous – such as giving all claimants nationwide $600 per week on top of regular benefits – during the pandemic have also made the system a more lucrative fraud target.
The federal “Pandemic Unemployment Assistance” program, for example, allows self-employed people and others who wouldn’t normally be eligible for unemployment insurance to self-certify their case for benefits, Richardson said. That means a basic safeguard to catch fraudulent claims – an employer’s verification that a claimant was laid off – is not available for those claims, he said.
“A check that existed in the regular UI program for decades doesn’t exist in this program,” Richardson said.
And since backdating allows multiple weeks of benefits to be requested at once, a single undetected claim can be worth thousands of dollars to fraudsters, Richardson said.
“What’s really happened is that the addition of $600 to the weekly benefit amount and the fewer barriers that there are to receiving benefits under the (federal Pandemic Unemployment Assistance) program have made it an especially attractive target to fraudsters. It’s increased the incentive,” he said.
