AUGUSTA, Maine — Mainers seeking to cheat the unemployment compensation system are up against yet another tool to catch them, a state computer match with the national database of newly hired workers that found 350 cases of potential fraud on its first use.
“We have been using the state new hire database for years,” said Laura Boyett, director of the Bureau of Unemployment Compensation. “This is the first time we have been able to query the national new hire database.”
Employers in every state are required to enter information on all newly hired employees, which forms the national database.
She said federal funds were used to pay for the necessary changes to the state computer system to allow it to pull data from the national database and match it with the state list of those receiving unemployment benefits. She said the new hire databases at both the state and federal level were created to help collect child support payments but have proven a good tool to find fraud and improper payments in the unemployment system.
“We have had great success with the state new hire database and now we are able to check on individuals that are collecting benefits from Maine but have moved on to another state,” Boyett said.
She acknowledged the 350 cases of potential fraud found on the first computer match is a large number given that only about 1,000 individuals living outside the state are getting Maine benefits from all of the various unemployment programs in any week. About 30,000 people living in Maine collect unemployment benefits weekly. She said each case will be reviewed because some may be properly getting benefits because they were hired, but have not actually started work or are working part-time and are still eligible for some benefits.
“We have to look into every case because most of these will not be fraud, but some will and we will seek return of improperly paid funds,” Boyett said. In cases where the state believes it was fraud, the case may be turned over to the attorney general for prosecution.
In addition to civil penalties and interest, there are criminal penalties of up to a year in jail and up to a $2,000 fine for unemployment fraud.
“This is good news,” said Peter Gore, vice president of the Maine State Chamber of Commerce. “There have been a host of different proposals to expand benefits under the unemployment system. But the reality is there have been no pieces of legislation, until this session, to bring more accountability to the system.”
That measure would bolster penalties to as much as 10 years in prison and a fine of up to $20,000 depending on the severity of the fraud involved. It also would increase the time a person is disqualified from receiving benefits.
Sen. Chris Rector, R-Thomaston, the co-chair of the Labor, Commerce, Research and Economic Development committee, is the sponsor of the measure. He praised the Labor Department’s use of the national new hire database to find fraud and errors in the system.
“Our goal is to make sure that everyone who is entitled to benefits is receiving benefits and anyone who is not entitled to benefits is not receiving benefits, plain and simple,” he said.
Rector said he wants to “root out” what fraud does exist because it drives up the cost of unemployment taxes for employers. He said the entire cost of the system is paid by employers in Maine, unlike some other states.
“I do not think that fraud is widespread in the system,” he said. “I think Mainers that are out of work want to get back to work just as soon as they can.”
Rep. John Tuttle, D-Sanford, the lead Democrat on the committee, agrees with Rector that there is little fraud in Maine. But, he said, any fraud should be prosecuted.
“Since the economy has down-turned and the massive increases we have had in unemployment, I think we will continue to see cases like this,” he said. “We should go after them to the fullest.”
Boyett said the national new hire database will now be checked weekly for potential fraud, just like the state new hire database. She said the program will be one more ongoing effort to reduce unemployment fraud.
Correction: An early version of this story requires correction. About 30,000 people living in Maine collect unemployment benefits weekly, not 50,000.