New York targets Insurance fraud statewide

Daily Record (Rochester, NY), Sep 24, 2008 by Elizabeth Stull

A recent crackdown on unemployment insurance fraud has resulted in 45 arrests and $237,000 in collections in seven counties, state Labor Commissioner M. Patricia Smith announced at a press conference in Buffalo on Tuesday.

Most of the defendants illegally collected unemployment insurance benefits while earning a paycheck, Smith said.

The arrests resulted from a new Labor Department program that emphasizes improved detection of fraud through data matching, more proactive investigations and better coordination with local law enforcement and prosecution agencies, Smith said.

Smith said she worked with nearly every district attorney in both regions.

Monroe County District Attorney Michael C. Green said eight arrests were made in Monroe County, where $46,101 in unlawful benefits were recovered. In other counties, authorities arrested 15 people in Erie and recovered $93,849; 18 people in Niagara County, recovering $78,466; and one in each of four other counties, Ontario ($7,800), Chautauqua ($4,620);,Wayne ($3,855) and Allegany ($2,265).

The government's limited resources must "not [be] squandered on cheaters," said Commissioner Denise E. O'Donnell of the Division of Criminal Justice Services.

When applicants cheat the system, businesses feel the pinch, she said.

The average employer in New York State has about 15 employees and will see a tax increase of about $1,000 in the calendar year following an undetected fraudulent claim against it, according to the Labor Department. There is no tax increase if the fraudulent claim is detected.

The department administers unemployment insurance benefits for the federal government, which provides payments for eligible workers who have lost their jobs through no fault of their own, at a rate of 50 percent of their average weekly wage up to $405 a week for a maximum of 39 weeks.

To qualify, people must be unemployed; ready, willing and able to work and searching for a new job. Employees in New York can be denied benefits if they are terminated for misconduct or leave the job for cause.

The program pays more than $2 billion in unemployment insurance benefits each year. Department investigations result in about 600 arrests and fraud prosecutions each year. Since January 2008, $16,750,000 has been collected and returned to the Unemployment Insurance Trust Fund as a direct result of state investigations, according to the Labor Department.

In 2007, there were 369 convictions statewide, with overpayments totaling more than $3 million. To date this year, $1.2 million in cases have been referred for prosecution, to date.

"Those who violate the law hurt workers, and hurt the law- abiding employers and employees who find it harder to compete with those who undercut the law for their own personal gain," said Assembly Labor Committee Chairwoman Susan V. John (D-131st).

"Especially now, with the national economy in turmoil, when too many workers face uncertainty about their employment, and the employment trust fund faces large demand we need to be extra vigilant and prosecute those who defraud the taxpayer," John said.

Anyone with information about fraud against the Unemployment Insurance Fund can call the Department of Labor's hotline to make an anonymous report, (888) 598-2077.