AUGUSTA, Maine — Labor Commissioner Robert Winglass is disputing federal Labor Department figures showing Maine’s unemployment system had fraud and errors amounting to $33.6 million last year.
Winglass says while the actual number is a little more than $6.5 million, he pledges to bolster efforts to reduce mistakes and go after fraud.
“That has been my top goal since I came through the door here,” Winglass said in an interview. “We have been looking very, very hard at the fraud situation.”
The federal figures were based on estimates for the period from July 2010 to June 2011, said Laura Boyette, director of the state Bureau of Unemployment Compensation. She said the actual numbers for the period reflect $5,186,120 in errors and $1,333,511 in fraud.
The fraud involved 773 individuals, or about 1 percent of the Mainers who received benefits over that period of time.
The federal estimates were based on a very small, unrepresentative sample, Boyette said.
The federal department reviewed about 360 out of the tens of thousands of cases in Maine, she said.
“In Maine one of our primary reasons for overpayment is individuals not doing or performing an adequate work search. That always results in an overpayment because we can’t assess that until the next week,” Boyette said.
She said the agency is trying to reduce that number by stressing to unemployment recipients their responsibility to continue searching for a new job while they are receiving benefits.
She said a significant number of overpayments occur because individuals go back to work and do not immediately notify the bureau.
“It can be five weeks before the computer match from the new hires database catches that error,” she said.
Those overpayments must be returned to the state and can cause problems for the recipient who suddenly owes money to the state when just returning to the work force.
But it is fraud that has Winglass the most concerned. He said he has ordered cases where individuals deliberately try to cheat the system take a high priority for the agency.
“We are making progress, and I think making progress at a pretty steady pace,” Winglass said. “We think the new hire system can be improved, and we can do a better job with that information.”
He said any amount of fraud is too much and that he is determined to reduce it in the system to as low a rate as possible. He said the agency plans to hire at least one more fraud investigator and the Maine State Police has agreed to provide additional training for investigators.
“Hopefully before Thanksgiving, we are going to have under way some prosecutions of some pretty significant fraud cases that we have identified,” Winglass said.
Unemployment benefits are funded by a tax on employers, and there was surprise and concern when the federal numbers were released last week.
“I was frankly shocked and alarmed at the original federal numbers,” said David Clough, Maine state director of the National Federation of Independent Businesses. “It’s nice to know it is not as bad as first portrayed, but is still something that concerns employers.”
He said the department needs to improve the way it handles errors and fraud and minimize the numbers as much as possible.
“That is a lot of fraud, a lot of people who are in effect trying to cheat the system,” Clough said.
He said there needs to be more education of both the employer community and those receiving benefits in order to reduce errors.
Peter Gore, vice president of the Maine State Chamber of Commerce, said with unemployment continuing at higher-than-expected levels, there will be continued pressure on the Labor Department to reduce errors and combat fraud.
He said employers expect the agency to be “good stewards” of the millions of dollars a year in taxes employers pay. In 2010, that totaled $132.9 million in Maine.
Gore said he has heard from employers “all the time” that say they are being ripped off because they see a person getting paid under the table and they know the person is receiving unemployment benefits. He said the department ought to consider expanding the investigation staff.
“I am not sure adding one more person is enough,” he said.