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

Louisiana Workforce Commission
Louisiana Workforce Commission(WAFB)
Published: Jun. 21, 2021 at 5:22 AM CDT|Updated: Jun. 21, 2021 at 9:15 AM CDT
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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.

RELATED: LWC employees may have been improperly compensated $786,000, state auditor finds

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

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