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Oregon Employment Department gears up to fight fraudulent claims

The acting director says the Oregon Employment Department is devoting more attention to preventing and fighting fraud, by hiring more people and training others, as the agency pays out a record amount of unemployment benefits.

David Gerstenfeld says people are being added to the unit that works with police and prosecutors to detect and combat fraud, and current staff members are undergoing additional training to recognize potentially fraudulent claims.

“Unfortunately, this has been a bigger frontier than usual during this pandemic and we have been spending a lot of time focusing on that,” he told reporters on a weekly conference call Wednesday. “We expect it will be an ongoing focus.”

Gerstenfeld has disclosed no figures. He has said he does not want to give any hints that might encourage numerous organized efforts at fraud. But he has said previously that Oregon has nowhere near the degree of losses reported in California, $11.4 billion as of January, and Washington, $600 million, according to a state audit in December.

The agency already has an internet address to report fraud. It’s unemployment.oregon.gov/unemployment-insurance-fraud-id-theft. There’s also a hotline at 877-668-3204.

Gerstenfeld was the director of the unemployment benefits division from 2011 to 2019, when he took a different job within the agency. Gov. Kate Brown named him the acting director of the department May 31, 2020, after she fired his predecessor over big backlogs.

From March 15, 2020, through Wednesday, the agency has paid out $7.6 billion in state and federal benefits — more than it paid during the previous decade — and has gone through 650,000 claims for regular benefits from the state unemployment trust fund. (About 70% have qualified for payment.) The total for the comparable period in 2019-20 was 131,000 claims, about 20% of the recent total.

During the Great Recession a decade ago, the number of claims rose over a 12-month period, as opposed to a two-month period last year, and they were largely federally funded extensions of regular state benefits, up to a maximum of 99 weeks that ended in 2013. For most people applying for those benefits, their applications could be checked against employer payroll records.

In contrast, Congress in the initial CARES Act last spring made self-employed and gig workers eligible for benefits for the first time in the unemployment system’s 85-year history, in addition to supplement payments of $600 weekly to all unemployed workers. Oregon and other states had to obtain information about income and identity from these first-time recipients.

Gerstenfeld said Oregon has paid out $612 million in benefits to 99,000 self-employed and gig workers in the federal program, which is known as Pandemic Unemployment Assistance. Thousands of others have qualified for some regular state benefits, so 68% of applicants have qualified.

Congress added identity requirements for those self-employed and gig workers in the latest 11-week extension of unemployment benefits under the Continued Assistance Act, which became law Dec. 27.

The U.S. House is now considering another extension of unemployment benefits, which for many will end March 13. The House proposal is for an extension to the end of August; President Joe Biden has proposed the end of September to coincide with the end of the federal budget year.

“The legislation we have seen moving forward does not in it have additional identity verification requirements,” Gerstenfeld said. “There were some additional requirements” as a result of the most recent law, he added, “but Oregon was already meeting what was required by that legislation.”

The Senate also will have to consider the legislation, which mirrors Biden’s $1.9 trillion pandemic aid plan.

Oregon Sen. Ron Wyden, the Democrat who now leads the tax-writing Finance Committee, has proposed adding $1 billion to help states improve their delivery of unemployment benefits and connect better with the U.S. Department of Labor, which oversees the system. A spokesman says Wyden also wants the Sept. 30 date Biden has proposed.

“We are ready to begin work programming any benefit extensions and new programs that are passed and signed by the president,” Gerstenfeld said.