State paid $8.5B in phony pandemic jobless claims

LANSING » Michigan likely paid about $8.5 billion in fraudulent jobless benefits over a 19-month period during the coronavirus pandemic, far more than previously estimated, according to a report released Wednesday by the state’s unemployment agency.

The figure, provided by Deloitte, came more than a year after the firm said the agency expected fraud losses in the “hundreds of millions” of dollars. State auditors have since reported that the agency improperly paid $3.9 billion to claimants who were later deemed ineligible.

There is “some overlap” between those payments — made to self-employed and gig workers who began qualifying for federal aid because of the pandemic — and the overall $8.5 billion estimate, said Julia Dale, director of the Unemployment Insurance Agency.

“My initial reaction to seeing these numbers is one of outrage and certainly frustration,” she told The Associated Press. “These are not the type of numbers that we had hoped to see or want to see.”

She added, however, that Michigan is doing a much better job blocking fraud, noting it avoided an estimated $43.7 billion in fraud from March 2020 through September 2021. The state paid $34.5 billion in benefits over that time.

The percentage of payments involving likely imposter fraud was 0.46% last fiscal year, down from 9.7% between March 2020 and October 2020. The portion paid for likely intentional misrepresentation fraud — when real claimants may fabricate income-verification documents or knowingly not report information that would make them ineligible — was 0.11%, a drop from 20.1%.