Amended Unemployment Bill Could Hamper Fraud Detection Efforts

MacIver News Service | July 20, 2011

[Madison, Wisc]  Wisconsin’s efforts to crack down on unemployment fraud took a serious blow Tuesday when the State Senate voted to eliminate a recently passed one-week waiting period for benefit recipients.

Unemployment benefit fraud in Wisconsin has skyrocketed over the past few years.  Between 2008 and 2010, the amount of fraudulent payments shot up from $21 million to $78 million. The number of cases increased 130 percent. The amount of overpayments over $1,000 that were intentionally concealed went from $9.25 million in 2007 to $40.5 million in 2010, a 338 percent increase.

A bill, amended and passed by the State Senate Tuesday afternoon could eliminate a newly instituted waiting period on the receipt of unemployment benefits that state officials say is a crucial part of the effort to root out fraud.

The waiting period became law as a part of the recently passed state budget. State officials advocated for the waiting period in order to investigate fraud and prevent overpayments.

“[The waiting period] actually ends up saving us about $50 million a year, because if you look at the first week when a termination or a resignation occurs, it gives the department the opportunity to evaluate what is that particular employee owed, if anything,” said Department of Workforce Development Secretary Scott Baumbach. “It cuts down on over payments.  It cuts down on fraud.”

Even with the cases of fraud increasing, few people have been successfully prosecuted for it.  In order to face punitive action, a person must have fraudulently received more than $5000 in benefits and committed 5 acts of concealment. In 2010, 2,169 people met those requirements, yet only 31 of them were prosecuted. That resulted in 11 convictions.

However, on Tuesday Democrats argued, and many Senate Republicans agreed, that the one-week delay punished the unemployed.

When the State Senate passed a bill that authorizes the use of federal funds to extend unemployment benefits by 13 weeks, they amended the bill to rescind the new waiting period.

The Senate approved the extension Tuesday by a vote of 30-3, with Republican Senators Grothman (West Bend), Lazich (New Berlin) and Zipperer (Pewaukee) voting no.

Senator Robert Jauch (D-Poplar) called the one-week waiting period “a 55 million dollar highway robbery of workers.”

Andrew Welhouse, spokesman for Senate Majority Leader Scott Fitzgerald (R-Juneau) said that even though the Senate approved the amendment, the bill is still a work in progress.

“It was put in because our senators are trying to work together to get to the right answer to help people who are out of work and struggling,” Welhouse said.  “There are still a lot of discussions back and forth between the Assembly, the Governor’s Office, and the Senate about this specific issue.”

The Assembly is expected to take up the measure Wednesday.