Louisiana has halted payments on tens of thousands of new unemployment claims filed after Nov. 5 as it weeds through potentially fraudulent claims.
The Louisiana Workforce Commission saw a drastic increase in first-time jobless claims in the past two weeks and about 32,000 claims are being "rigorously reviewed for validity," the agency said Wednesday.
For the week ending Nov. 14, the state showed first-time jobless claims surging to 43,618, compared to 10,045 filed the week before and then dropping back in its latest report to 9,320.
New unemployment claims had not reached such a height since early May as pandemic-related lockdowns took a toll on employment. New jobless applications had been on a mostly downward trend since late September.
In addition to the surge it saw in traditional unemployment claims, new applications around the state for the federal Pandemic Unemployment Assistance program, which is mostly for self-employed and so-called gig workers, saw 39,500 new claims two weeks ago, which dropped to only 9,697 new claims in the latest report.
Since the coronavirus pandemic began, the state agency already has stopped more than 160,000 jobless claims that are potentially fraudulent or tied to identity theft, with that number growing daily as fraud attempts are made. The agency noted that there's been an increase in fraudulent activity regarding unemployment claims across the country.
“Our office remains conscientious in detecting and combating fraud,” Ava Dejoie, secretary of the Louisiana Workforce Commission, said Wednesday. “We are tracking this data to identify any potential fraudulent claims that may have been filed. We apologize for any delay or inconvenience this issue may bring to our Louisiana families and workers, especially entering the holiday season.”
As a result, all unemployment seekers may experience a delay in payment of benefits, the agency said. The agency is working with an undisclosed vendor to implement new security measures to prevent future fraud. Individuals filing unemployment insurance claims must now upload personal identification to verify their identity, and individuals should expect to upload documents again if they have already done so.
“We monitor and review our systems on a daily basis as people committing the fraud constantly change their methods,” Dejoie said. “We work diligently with our security team and federal and state law enforcement to stay ahead of the fraud schemes.”
Many of the 43,618 first-time claims for the week of Nov. 21, about 10,400 of them, came in real estate, rental and leasing services and another 7,000 in professional, scientific and technical services. Both categories do not typically lead the job sectors hit by layoffs in Louisiana during the pandemic and neither has had any major layoffs recently.
Claims in past reports have typically come from the hard-hit food services and hotel accommodations category, followed by education and health services and construction.
The state has amended the claims data it previously submitted to the federal government until it can further review all the suspicious claims. LWC decided to stop all payments from the unemployment trust fund and Pandemic Unemployment Assistance program filed after Nov. 5 pending further identity verification.
LWC reminded individuals that it does not contact jobless applicants directly seeking personal information and that they should not share personal information. Rather, all information is added directly into the state's website through password-protected portals.
The U.S. Department of Labor said an unexpected spike in new unemployment claims is one indicator of potential fraud and laid out the process for determining explanations.
If there is evidence of fraud, the federal government brings in the Office of the Inspector General and other resources through the unemployment insurance integrity center.
"When that occurs, the department is immediately in contact with the state to assess the situation and work with the state to address it," according to a DOL spokesperson. "The Department is currently working with and supporting Louisiana's and other states' efforts to prevent, detect and recover fraudulent payments."
During a late October interview, Dejoie had said LWC was investigating 84,000 potentially fraudulent unemployment claims then. Some of those claims could have been legitimate and caused by paperwork errors, like a business not having a record of someone who worked for them or a person’s address being incorrectly entered.
But in some cases, crime rings have been trolling the internet to find publicly available information on Louisiana workers and attempting to file fraudulent unemployment claims on their behalf, without their knowledge.
“Any time there are funds being used, a program to help people in the community, there is always going to be fraud,” she said at the time.
Dejoie said it was “impossible to compare” the potential fraud that has happened during the pandemic with unemployment fraud in past years because of the sheer scope of people being helped during the pandemic. In all of 2019, the state paid out $153 million in unemployment benefits to 100,000 recipients. In contrast, from March 22 to Oct. 19, she said there was $6.5 billion in unemployment payments made from federal and state funds. And the scope of workers who were eligible for benefits had greatly expanded because of the pandemic to include people who are self-employed and gig workers.