Audit shows LWC paid more than $1 million to dead people

BATON ROUGE, La. (WAFB) - The Louisiana Legislative Auditor’s office reported the Louisiana Workforce Commission paid out more than $1 million in state and federal unemployment insurance payments to 347 dead people.

The audit states that $123,194 could have been prevented if the LWC conducted a weekly match with the Louisiana Department of Health’s death data instead of the monthly match.

Although LWC could not prevent all of the payments from being made, LWC can attempt to recover all of the potentially improper payments.

LWC is working to resolve these issues and is taking steps to recoup payments for cases identified as potential fraud and/or overpayment.

LWC issued the following response to the audit:

Mr. Waguespack,
The Louisiana Workforce Commission (LWC) respectfully submits its responses to the report,
Improper Payments in the Unemployment Insurance Program: Deceased Recipients.
My administration remains committed to ensuring the integrity of the Unemployment Insurance
(UI) program. To be clear, the findings at issue in this report occurred during a time of
extraordinary challenges. As a result of the COVID-19 pandemic, LWC was tasked with
implementation of federal CARES Act benefit programs which were not initially equipped with the
safeguards that typical state Unemployment Insurance programs provide. Under normal
operating procedures, state UI programs are equipped with checks and balances that would
largely prevent the types of occurrences that are addressed in the audit report.
LWC will continue interfacing with the national and state databases we use to detect and prevent
fraudulent claims for unemployment compensation, including cross-matching against the Social
Security Administration (SSA) and Louisiana Department of Health (LDH) death record
databases. As noted in your report, we could not have prevented all of the improper payments
identified, especially considering some of the known deficiencies of the SSA’s death master file
and the reporting lags sometimes associated with state vital records. However, the LWC will work
diligently to resolve all issues within our control. Roughly 58% of the payments identified in this
audit could not be detected through a cross-match process. The remaining 42% detected in the
audit accounts for less than .006% of total payments processed by the LWC.
During the audit period, the LWC detected over 7,000 deceased individuals and flagged these for
further verification. The largest percentage of the deaths detected by LLA through this audit is a
result of identity theft which has and will continue to plague states administering the CARES Act
programs. While the CARES Act provisions allowed deserving individuals that would have
otherwise been ineligible to receive benefits, its programs were hastily implemented during a
challenging time and with guidelines that were continuously revised. Initially, the relevant
provisions of the CARES Act allowed individuals to file and receive benefits without any reported
earnings from a covered employer. Self-certification programs, by their very nature, run counter
to typical UI operations and safeguards. Normal UI operations require all state workforce agencies
to validate the claimant’s representations against wage records and employers’ responses. The
LWC was explicitly prohibited from employing this long-standing integrity principle during the first
several months of the Pandemic Unemployment Assistance (PUA) Program. Therefore, these
claims bypassed our first line of defense.
Prior to the CARES Act, an identity that is linked to an individual who has been deceased for 18
months or longer would not be monetarily eligible to receive benefits, resulting in an instant denial
of benefits. The initial prohibition on requiring proof of employment during the pandemic hindered
the LWC’s ability to detect that an individual had been deceased prior to the reporting. At the
urging of states and the USDOL Office of Inspector General, Congress later removed the
prohibition against requiring documentation, and to mitigate the onslaught of fraud in the States,
required proof of employment for any individual filing for benefits after December 26, 2020.
As noted in your report, some payments continued once an individual became deceased. These
benefits were applied for by an individual that was privy to the deceased individual’s log in
information. Post-death benefit payments occur generally for one of two reasons: 1) an individual
connected to the deceased individual files for benefits with the true belief that since the individual
was alive during that week, they are entitled to the benefits for that week, or 2) an individual
connected to the deceased individual files for benefits with the intent to commit fraud and receive
benefits they are not entitled to receive. In other cases, our investigation reveals that some
individuals were erroneously flagged as deceased by entities supplying death file information.
Although the LWC will pursue a more frequent cross-match with LDH for death records as
recommended, this will not prevent all improper payments in the future. It is virtually impossible
to be immediately informed that an individual is deceased. In some cases, the SSA or LDH do
not have the information available for a period of time after an individual is deceased.
To that end, the LWC reaffirms its commitment to continue to make enhancements to the
administration of the Unemployment Insurance program despite the many challenges that will
undoubtedly arise.
Should you have any questions or need additional information, please feel free to contact my
office at 225-342-3001.
Sincerely,
Ava Cates, Secretary