Fraudulent claims delaying benefits for jobless Nevadans

Top leaders from the state workforce agency told lawmakers Thursday that fraudulent unemployment claims have a human cost: delayed benefits for jobless Nevadans who truly need them.

Elisa Cafferata, director of the state Department of Employment, Training and Rehabilitation, said the agency is working with Gov. Steve Sisolak’s finance office to bring on more staff to catch up on the backlog.

As of Thursday, agency leaders said there were 41,676 regular Unemployment Insurance and 41,171 Pandemic Unemployment Assistance claims pending. In addition, 52,797 UI and 253,835 PUA claims were flagged for identity issues, suspected for fraud, and are preventing payment.

Cafferata said that initial jobless claims also went up since last appearing before lawmakers in February.

“Just since the last time we saw you, we’ve had almost half a million new initial applications,” Cafferata said. “Probably 95 percent of which, we believe, to be fraudulent.”

DETR saw more than 100,000 initial applications for unemployment in January after the $900 billion stimulus package was signed into law. Agency leaders said that makes up a “large portion” of the questionable 250,000-plus PUA claims flagged.

Cafferata said that the agency reviews every individual claim that is filed, currently at nearly 2 million.

“We hear every day from legitimate claimants who need our help, and to me, that is the true cost to Nevada: These criminal rings have delayed these benefits for people who are desperately in need,” Cafferata said Thursday. “So far, we haven’t been able to assemble enough staff, time, and money to catch up. But that is our goal.”

Cloud-based UI software

Appearing on Thursday before the Assembly Committee on Ways and Means and the Senate Committee on Finance, Subcommittees on Human Services, agency leaders presented four different budgets.

The agency said Sisolak has earmarked some money for “stabilization” for immediate fixes in the unemployment system.

For the long-term, however, DETR said that it is looking at updating its unemployment systems, opting for a cloud-based solution. It’s expected to cost between $30 million to $50 million and will take nearly four years to develop after a request-for-proposal process and an award has been approved.

“You have much more ability to adapt and change your programming,” Cafferata said of a cloud-based unemployment system. “Right now we’re working on a system with what has been described as ‘vintage code,’ which is not a virtue in a computer system.”

Adding new coding to the existing system slows it down, she said, and a modern unemployment software is adaptable. This means the state will not have to replace the UI system every 10 years, “which is sort of what the traditional model of computer programming has been,” Cafferata said.

“It will have all the bells and whistles of modernization, not only for internal staff to use, but also for claimants,” said Marilyn Delmont, chief information officer at DETR. A cloud-based system would allow faster processing and delivery of computing services, she said, as well as a lower cost of maintenance and upkeep.

Delmont added that a cloud-based UI system would allow for “easier and faster scalability in the event that we have to rapidly scale up or down.”

Fraud investigations

DETR leaders said that it is reporting cases of fraud to state and federal law enforcement, though they don’t have much information that they can share with lawmakers.

“Oftentimes, when we’re working with these law enforcement agencies, they conduct investigations once we make the reports to them, and they are not necessarily — and I understand why, this is not a criticism — but they don’t share that information,” said Jeffrey Frischmann, a former deputy administrator contracted by DETR.

He said that law enforcement investigations are often confidential and that DETR is made aware of the results of investigation years later. “It’s frustrating, of course, because we want the information now, just like you do, but it doesn’t come back to us that quickly,” Frischmann told lawmakers.

DETR reports fraudulent claims to the Nevada Attorney General’s office as well as federal law enforcement agencies like the Federal Bureau of Investigation and the U.S. Secret Service.

“A lot of this is international crime, a lot of this is coming from other continents and other parts of the country,” said Frischmann, “So it’s really out of the jurisdiction of our Attorney General and our local law enforcement.”

Cafferata said Nevada needs the federal government to “really step in and assist” with the investigations since fraudsters are filing in Nevada and other workforce agencies across the U.S.

Contact Jonathan Ng at jng@reviewjournal.com. Follow @ByJonathanNg on Twitter.