COLUMBUS, Ohio — Nearly a year after the coronavirus pandemic overwhelmed the state’s unemployment system with claims, the state’s Department of Job and Family Services (ODJFS) is now working to clean up the mess of fraudulent benefit accounts.
Director Kimberly Henderson reported Wednesday the state paid 60,000 fraudulent unemployment overpayments totaling $332.3 million.
“That represents fraudulent overpayments that we have moved through the determination process, and have essentially cleared,” said Henderson. “There are a number more that are flagged that are working through the determination process.”
ODJFS reports fraud data to the federal government at regular intervals. From October 2020 to December 2020, ODJFS identified 2,200 fraudulent regular unemployment insurance payments totaling $2.3 million. And during December 2020, Henderson said there were 56,000 fraudulent overpayments in the Pandemic Unemployment Assistance (PUA) program totaling $330 million in PUA and Federal Pandemic Unemployment Compensation benefits.
The state’s process for issuing 1099-G tax income forms to unemployment claimants flagged an unusually high number of forms for Tax Year 2020, according to the department. Ohio issued a record-high 1.7 million 1099-G forms for 2020. The state flagged at 166,000 PUA 1099-Gs and 1,900 regular unemployment 1099-Gs as fraudulent, but many Ohioans received notice that they were paid benefits they never claimed. ODJFS reports that employers are also receiving notices of separation for employees still working, another indicator of fraud.
ODJFS is still working with law enforcement to track down fraud actors and identify the origins of the fraud. Henderson said safeguards prevented 100,000 fraudulent claims from payment.
“We do know that there is likely international engagement, but then there is stateside fraudulent activity, fraudsters, impacting our system as well,” said Henderson. “There are individuals here in the nation that have applied some very dedicated focus to this.”
Regular unemployment compensation is funded primarily by the state, while PUA is funded by the federal government. Henderson said it is unclear how much of the fraudulent payments can be recovered.
“We have seen that some states have been able to recover some amounts, but it remains a challenge in terms of being able to form a picture of how much we will be able to recover at this time,” said Henderson.
ODJFS advises any Ohioan who receives a 1099-G from ODJFS but did not apply for unemployment benefits, to report the potential identity theft using their online form on its website. Employers can now also use the website to mass report fraudulent claims against employees. Henderson says there is additional guidance on the ODJFS and Ohio Attorney General websites, but Ohioans who received fraudulent 1099s are asked not to file the document with their regular tax return.
“After we receive a report of potential identity theft, we will process the report, issue applicable fraud determinations, and if necessary, issue a corrected 1099 form to the IRS,” says Henderson, who apologized again for continued issues for claimants. “It’s a multistep process where we set the flags for fraud, undertake a fact-finding process, there is a response period, we do an investigation, make a determination, and then individuals also have appeal rights.”
To further address fraud issues, ODJFS launched a hotline for fraud issues at 833-658-0394, open from 9 a.m - 5 p.m Monday - Friday.
Gov. Mike DeWine also announced that the state would partner with private sector executives to help address unemployment issues, and is expected to provide more details in his Thursday, Feb. 4 briefing.