State’s fraud investigations have derailed some Mainers’ federal unemployment benefits

The effort to root out identity fraud in Maine’s unemployment insurance system has delayed establishing federal programs to aid jobless Mainers.

From the week ending May 30 to the week ending June 20, the Maine Department of Labor canceled roughly 23,900 initial claims and 41,000 weekly certifications that were determined to be fraudulent – a total of 64,900 claims.

Tackling the widespread fraud allegedly perpetrated by organized criminal groups put a strain on the understaffed department, derailing efforts to deliver benefits to Mainers covered under federal unemployment programs, Labor Commissioner Laura Fortman said in a Thursday briefing to lawmakers.

“The people who are working to put those flags and filters in place on our computer program are the same people we need to use to design and implement some of the federal programs,” she said.

One example is the Pandemic Unemployment Assistance program, which provides benefits to people who are self-employed or work on contract and do not qualify for state unemployment benefits.

Maine enacted that program in May, but because of complications with income verification, the state pays each claimant a base benefit of $172 a week. The intent was to get money to people quickly, then determine how much of a weekly benefit they should receive based on their prior income, up to $445 a week at the time.

Income verification was meant to occur in late May, around the time the department discovered widespread fraud problems in its system, Fortman said.

The result is that thousands of workers have only received the lowest amount, plus a $600-per-week added federal benefit, for more than a month.

The department has no specific date for when those people will start receiving correct benefits and retroactive pay, but Fortman said it will be soon. About half the people receiving PUA benefits will not have to provide income documents because Maine Revenue Services will be able to verify their income, she told lawmakers.

The second delayed benefit is Pandemic Emergency Unemployment Compensation, available to people who have exhausted their unemployment benefits. Those eligible for that program have been filing under PUA, but will be shifted over to the correct program starting next week.

“Our goal is to get benefits into the hands of people,” Fortman said.

Inadequate staffing is still the biggest bottleneck the department has to face with the system’s increased demand and responsibilities, she told lawmakers. The labor department is on a hiring push to bring on dozens of extra staff.

Even with staffing problems, Maine is currently delivering benefits to 82.5 percent of claimants, Fortman said. That is higher than some states such as Arizona, which delivers to only 50 percent of claimants, but below Maryland and Michigan, which are above 90 percent, she said.

“We are aspiring and doing our best to continue to increase our processing rates so we are able to meet or exceed the levels” of those states, Fortman said.

The number of jobless claims fell slightly in Maine last week as the state Department of Labor continued to root out identity fraud within the system.

About 4,500 Mainers filed initial unemployment claims last week as the labor department canceled thousands more fraudulent claims. The total number of state and federal claims filed in Maine was 5,600, which included 1,100 duplicate claims caused by overlap between the two systems.

The total number of initial claims filed was down slightly from 5,900 the previous week, filed by about 5,000 individual Mainers.

State and federal authorities have said that organized criminals used personal information stolen during data breaches to file for benefits under other people’s names. The department temporarily halted payments in late May to root out fake claims.

About 64,400 weekly certifications were filed last week for state unemployment, it said. In addition, about 26,400 weekly certifications were filed under the federal Pandemic Unemployment Assistance program. Weekly certifications must be filed by claimants every week in order to continue to receive unemployment benefits.

Maine’s official unemployment rate in May was 9.3 percent, but is actually closer to 18 percent after correcting for data irregularities.

Nationally, claims for unemployment benefits declined slightly to 1.48 million last week, the 12th straight drop and a sign that layoffs are slowing but are still at a painfully high level.