The state Senate passed a bill aimed at making unemployment compensation insurance fraud unit within Workforce West Virginia official under state law.
That follows a legislative audit calculating that West Virginia paid out nearly $83 million in fraudulent unemployment claims during the covid-19 pandemic.
Senate Bill 543 was passed on a 33-1 vote. The only no vote was cast by Senator Hannah Geffert, D-Berkeley, who had asked whether any provisions in the bill would apply to fraud by businesses as well as fraud by unemployment insurance applicants.
The bill authorizes the state’s unemployment commissioner to hire supervisory, legal and investigative workers to spearhead inquiries when the unit has reasonable cause to believe fraud has occurred.
The unit also would be authorized to share information with other federal, state or local enforcement agencies and make criminal referrals to prosecutors.
“These investigations can be initiated by the unit, or they can review reports or complaints of allegations from federal, state and local law enforcement,” said Senator Eric Tarr, R-Putnam, who explained the bill to his fellow senators.
The issue arose, in West Virginia and elsewhere, when state agencies across the country were hit by widespread fraud after the pandemic hit in early 2020, causing government orders to halt or slow business activity. Unemployment skyrocketed, with thousands of claims causing strain on the government agencies administering them.
West Virginia’s audit noted that the total number of claims processed by Workforce increased from 52,896 in 2019, the year prior to the pandemic, to 457,399 in 2020.
Workforce’s process was not designed for the onslaught of claims — or for a structure that allowed people to certify their own pandemic unemployment claims.
Soon after the state agency implemented the Pandemic Unemployment Assistance program, it began to identify a high level of fraud as insurance claims were being paid.
The U.S. labor department has said much of the fraud is attributed to organized crime rings that bought identity information stolen in past data breaches. The stolen data is then used to apply for benefits in others’ names.
Once the trend of widespread fraud became clear, Workforce implemented a fraud unit, a cross-match unit and an investigations unit in addition to developing partnerships with various state agencies to cross-match data and to identify bad actors.
The legislative audit noted that Workforce also could have partnered with other state agencies — such as the state Auditor’s Office — to run checks on whether claims filed in the names of state employees were accurate or the Division of Corrections to determine if claims were filed for incarcerated people.
The bill passed by the Senate would codify the organization of the fraud unit. The bill now goes to the House of Delegates.