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Politics & Government

California besieged with more unemployment fraud attempts

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Miguel Gutierrez Jr.
/
CalMatters
The offices of the Employment Development Department in Sacramento on Jan. 10, 2022.

The state's Employment Development Department says it suspects 98% of the 27,000 medical providers associated with disability claims are fraudulent.

Two years into the pandemic, fraudsters continue to target California’s unemployment department.

The Employment Development Department, which last month froze about 345,000 disability insurance claims it flagged as suspicious, announced that it suspects that a whopping 98% of the 27,000 medical providers associated with those claims are fraudulent. So far, EDD said, only 485 providers have managed to verify their identity. The agency couldn’t say how much money it might have paid for those scam claims.

Although EDD has made progress on key reforms after paying at least $20 billion worth of fraudulent claims amid the pandemic, challenges remain. The agency noted that some legitimate providers and claimants were ensnared in the mass freeze and will have to go through additional verification procedures before payments can resume.

  • One such claimant is Erick Robles, 35, a Hollister resident and contractor who went on disability this fall. His payments stopped in December, he told the San Francisco Chronicle, and he said that EDD told him “there’s nothing we can do.”
  • Robles: “This is like an unfair science experiment.”

EDD is also requiring 1.4 million recipients of federal pandemic unemployment benefits to retroactively prove their eligibility or repay the money plus a hefty fine — but 1.1 million cases remain unresolved.

And Daniela Urban, executive director of the Center for Workers’ Rights, told the Chronicle that “it’s clear EDD does not have a standardized process of reviewing these documents.”

  • In one case, she said, husband-and-wife street vendors submitted identical eligibility information to EDD, which accepted the wife’s documents but rejected the husband’s.

Friday, Gov. Gavin Newsom announced that Rita Saenz, EDD director since 2020, is stepping down and that he is appointing Nancy Farias, the chief deputy director of external affairs, legislation and policy since 2020, to replace her. Saenz “spearheaded important reforms at the Department to better serve working Californians, prevent fraud and hold bad actors to account,” the governor said in a statement.

Another looming challenge for the state: Its growing unemployment insurance debt. As of Jan. 25, California had borrowed nearly $20 billion from the federal government to pay jobless claims — accounting for 49% of all outstanding debt owed by states, according to the California Budget & Policy Center. Though Gov. Gavin Newsom has proposed paying down $3 billion of that debt, business groups, which finance the state’s unemployment insurance fund, say it’s not enough. Other advocates say it’s time to overhaul how the fund is structured.

Other California employment updates:

  • Californians submitted nearly 60,000 new jobless claims for the week ending Jan. 22, according to federal data released Thursday. Although that’s a decrease of nearly 3,000 from the week before, it still accounts for more than 22% of new claims nationwide.
  • The Golden State has the highest jobless rate in the country at 6.5%, the feds revealed this week.
  • Newsom announced Thursday that California has signed the Equal Pay Pledge — reaffirming its commitment to closing the gender pay gap — and established the state’s first Chief Equity Officer position.
  • And the state launched a $185 million jobs program for disadvantaged youth and young adults.

CalMatters is a nonprofit, nonpartisan media venture explaining California policies and politics.