Unemployment Insurance Program Integrity Report, Virginia Employment Commission (January 17, 2024)

Summary

Memorandum dated January 17, 2024 from Demetrios J. Melis, Commissioner, on the Unemployment Insurance Program Integrity Report, addressed to members of the Senate of Virginia and others including the chairman of the Commission on Unemployment Compensation. It states that the Virginia Employment Commission uses the Integrity Data Hub (IDH) to crossmatch initial claims and prevent fraudulent activity. It reports that overpayments paid from April 1, 2022, through March 31, 2023, were $39,506,843.00, and that overpayments prevented from being paid were $43,615,716.00. It states that as of December 2023 the Commission processed 112,436 overpayment waiver applications and 93,256 overpayment waivers were approved, for a total of $309,353,306.79.

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Demetrios J. Melis                                                                                  Post Office Box 26441
Commissioner                                                                                    Richmond, VA 23261-6441



                                                  January 17, 2024

           TO:
           The Honorable Jennifer Boysko        The Honorable Adam Ebbin
           Senate of Virgina                    Chairman, Commission on Unemployment Compensation
           P.O. Box 689                         Senate of Virginia
           Richmond, Virginia 23218             P.O. Box 396
                                                Richmond, Virginia 23218

           The Honorable R. Lee Ware            The Honorable Elizbeth Bennett-Parker
           P.O. Box 689                         107 South West Street, #152
           Powhatan, Virginia 23139             Alexandria, Virginia 22314

           The Honorable Chris Runion
           P.O. Box 202
           Bridgewater, Virginia 22812

           FROM:         Demetrios J. Melis, Commissioner

           RE:           Unemployment Insurance Program Integrity Report


           Executive Summary

           The Virginia Employment Commission shall report by December 1 of each year to the
           Commission on Unemployment Compensation, the implementation and enforcement of the
           provisions of §60.2 -612.1(F) Program Integrity.

           INTEGRITY MEASURES

           The VEC utilizes various resources to ensure program integrity. VEC uses the Integrity Data Hub
           (IDH) to crossmatch initial claims and prevent fraudulent activity. All VEC fraud investigators
           and analysts have completed the UI National Integrity Academies virtual training. They have
           utilized National Association of State Workforce Agencies’ (NASWA) UI Knowledge Exchange
           Library to publish a VEC claim handbook based on the Model Claimant Handbook. VEC regularly



     (866) 832-2363                                                                   VRC/TDD VA Relay 711
     E-Mail: CustomerService@vec.virginia.gov                               Equal Opportunity Employer/Program
                                                                                           Page 2



participates in UI integrity calls hosted by NASWA, which review regional and national trends in
security awareness.

Initial claims are verified daily through the Social Security Administration and IDH. Weekly
Certifications are crossmatched using the National Directory of New Hires (NDNH). VEC utilizes
its UI technology system, VUIS, to make comparisons and crossmatch data to detect shared
characteristics among claims. All logins to the VEC database are also authenticated through
third party technology platforms for added security. VEC conducts quarterly wage records
crossmatches. When VEC suspects or receives allegations reasonably believed to constitute UI
fraud, waste, abuse, mismanagement, or misconduct we regularly report significant cases upon
identification as outlined by the DOL Office of Inspector General.


OVERPAYMENT EFFORTS

The VEC is engaged in various overpayment recovery efforts. We negotiate and accept
repayments through various methods including cash, check or money orders. Additionally, VEC
offsets future benefits to recoup outstanding overpayments, unless a claimant is in the appeals
process. Recoupment ranges from 100 percent of the overpayment if the claimant was at fault
and 50 percent if the agency was at fault. The VEC participates in bother the Cross Program
Offset Recovery Agreement and the Interstate Reciprocal Offset Recovery Arrangement, per
federal guidelines. Overpayments may also be offset from state income taxes. Other promising
efforts for the VEC to recover losses has been through prosecutions with state and federal
agencies. Additionally, identity verification is lowering identity theft fraud claims that lead to
improper payments.

Efforts to recoup fraudulent overpayments during the last two years have resulted in 46
indictments for a total of 36 cases resolved with the assistance of the Commonwealth’s Office
of the Attorney General Unemployment Compensation Fraud Unit. There have also been 110
federal cases resolved with the average amount of overpayment being $215,514.32 for a total
of $19,827,317.17 in restitution ordered.

TYPE AND AMOUNT OF IMPROPER PAYMENTS DETECTED RETROACTIVELY

The total amount of overpayments paid from April 1, 2022, through March 31, 2023, was
$39,506,843.00. These overpayments came from the following issues, with the percentages
being the percent of dollars overpaid:

   •   Work search – 31.088%
   •   Separations – 23.023%
   •   Benefit Year Earnings – 14.960%
   •   Able & Available – 4.124%
   •   Other Eligibility – 24.682%
   •   Other Issues – 2.124%
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TYPE AND AMOUNT OF IMPROPER PAYMENTS PREVENTED

The total amount of overpayments that were prevented from being paid was $43,615,716.00.
This dollar amount accounts for 138,669 individual potential overpayments by week. The issue
types involved in these overpayments included separations, work search, able and available,
reporting requirements, questionable identity, and other eligibility issues.

MONIES SAVED IN PRVENTING AND RECOUPING IMPROPER PAYMENTS

In 2023, the dollar amount of overpayments that were prevented from being paid was
$43,615,716.00.



NONRECOVERY OF OVERPAYMENTS

The large majority of nonrecovery of overpayments during this reporting period came from the
overpayment waiver legislation that was introduced during the 2021 General Assembly session
under HB2040. This legislation amended §60.2-619 and 60.2-633 to allow the VEC to waive the
requirement that an overpayment be repaid if certain conditions were met. The conditions
were (i) the overpayment as made due to no fault on the part of the individual receiving
benefits and (ii) requiring repayment would be contrary to fairness and good conscience. As of
December 2023, the VEC has processed 112,436 overpayment waiver applications and 93,256
overpayment waivers have been approved, for a total of $309,353,306.79. In addition to the
state UI benefits waivers, there was a federal blanket waiver program. The VEC has approved
10,484 federal waivers, for a total of $15,118,315.88.


Please do not hesitate to contact me at demetrios.melis@vec.virginia.gov or (804) 786-3001
with any questions.

                                                   Sincerely,



                                                   Demetrios J. Melis
                                                   Commissioner


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