Va. AG hiring staff to target unemployment fraud

Virginia’s attorney general on Thursday announced he has signed an agreement with the Virginia Employment Commission to hire more staff dedicated to investigating and prosecuting fraudulent unemployment claims, a problem that has cost the state more than $100 million since 2020, a report estimates.

According to Attorney General Jason Miyares’ spokeswoman, Victoria LaCivita, his office is hiring staffers to work with localities under the agreement, including attorneys and investigators who will be in a dedicated unit of the attorney general’s office. “We plan to work with state, local and federal officials to prosecute fraud,” she said. “Many of our prosecutors in the major crimes and emerging threats section are cross-designated as special assistant United States attorneys.” The precise number of new hires is still to be determined, LaCivita said.

VEC, which was hit with an avalanche of unemployment requests beginning in March 2020, has struggled to keep up with backlogs of unemployment claims, which led to a lawsuit by several Virginia residents who didn’t receive insurance, as well as state legislature scrutiny. Chronic understaffing, blamed for the backlog, also resulted in about $70 million in fraudulent payments in 2020 and $29 million in the first quarter of 2021, according to a report released by the Joint Legislative Audit and Review Commission (JLARC) in November 2021.

JLARC estimated that fraudulent claims in Virginia grew a whopping 440% — from 1.4% of all claims in 2019 to 7.5% in 2020. Another problem was that VEC did not begin using best practices in fraud detection and prevention until 2021, and the majority of JLARC’s numbers in the report were estimates because at least 164,456 potentially fraudulent claims had not been investigated as of October 2021.

Aside from understaffing, the VEC’s modernization of its unemployment claims process has lagged behind schedule, forcing staffers to manually process claims, which JLARC’s report says increases the risk of inaccurate or fraudulent benefit payments. VEC may have incorrectly paid out an estimated $930 million in 2020 and $322 million between January and June 2021, the report says. Most of that was due to overpayments caused mistakenly by claimants, employers or VEC staff, or because of fraud. In several instances last year, VEC shut down its online claims systems, including once in December, specifically to “limit fraud,” requiring claimants to call its hotlines to file.

In February, Gov. Glenn Youngkin announced that as of Jan. 15, the backlog of employment separation reports — documents that are required for claimants to receive unemployment funds — had been reduced by nearly 89% from 246,273 to 27,728, and unpaid pending claims were reduced from 24,887 to 15,846.

“There is a tremendous amount of work to be done to refocus on our customers, the individuals and employers, and get them the resources they need,” VEC Commissioner Carrie Roth said in Thursday’s announcement. “Working with the attorney general’s office, we are increasing our efforts to go after those who are committing fraud and taking from Virginians the benefits they are entitled to receive. This fraudulent activity is frustrating to many Virginians who are already in tough situations, and we are bringing the additional support of the attorney general’s office to hold those committing this crime accountable.”

Youngkin said in his own statement, “When someone commits fraud against the state, they are stealing from all Virginians. When that fraud impacts our unemployment insurance program, it is especially hurting people in need. I am proud of Attorney General Miyares who will take on this important role of fighting fraud and abuse on behalf of all Virginians.”

To report suspected unemployment insurance fraud, visit the VEC’s website.