Calendar Year 2007 Benefit Accuracy Measurement Data Summary
Summary
The U.S. Department of Labor Employment and Training Administration summary of Calendar Year 2007 Benefit Accuracy Measurement (BAM) data covers paid and denied claims in State UI, UCFE and UCX. UI benefit payments included in BAM increased to nearly $32.3 billion, compared with $30.2 billion in CY 2006, and CY 2007 paid claims results are based on 24,802 sample cases. It reports a BAM operational rate of 5.62%, an Annual Report rate of 9.13% and a fraud rate of 2.73%. Adjusted improper denial rates are 10.72% for monetary denials, 5.17% for separation denials and 9.90% for nonseparation denials.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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Cite this document
“Calendar Year 2007 Benefit Accuracy Measurement Data Summary.”
Original at oui.doleta.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/bam-cy2007/
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Calendar Year 2007 Benefit Accuracy Measurement Data Summary
The Benefit Accuracy Measurement (BAM) program is designed to determine the accuracy
of paid and denied claims in three major Unemployment Insurance (UI) programs: State UI,
Unemployment Compensation for Federal Employees (UCFE), and Unemployment
Compensation for Ex-Service members (UCX). State Workforce Agencies (SWAs) select
weekly random samples of UI payments and denied claims. BAM investigators audit these
paid and denied claims to determine whether the claimant was properly paid or denied
eligibility. The results of the BAM statistical samples are used to estimate accuracy rates for
the populations of paid and denied claims. In addition, BAM is a diagnostic tool for Federal
and State Workforce Agency (SWA) staff to use in identifying systemic errors and their
causes and in correcting and tracking solutions to these problems.
The Improper Payments Information Act (IPIA) of 2002 (Pub. L. No. 107-300) requires
agencies to examine the risk of erroneous payments in all programs and activities they
administer. An improper payment includes any payment that was made to an ineligible
recipient, duplicate payments, and payments that are for the incorrect amount -- both
overpayments and underpayments, including inappropriate denials of payment or service.
Agencies are required to review all programs and activities they administer and identify
those that may be susceptible to significant erroneous payments. The Office of
Management and Budget (OMB) has defined “significant erroneous payments” as annual
erroneous payments exceeding both 2.5 percent of program payments and $10 million. UI
meets both of these criteria. The Department of Labor (DOL) reports to OMB the Annual
Report and Operational Overpayment rates, as well as the underpayment rate and improper
denial rates, as part of its IPIA report. It is extremely important that BAM accurately
measures the level of improper payments so that performance against the targets can be
properly evaluated.
Readers are strongly cautioned that it may be misleading to compare one state's payment
accuracy rates with another state's rates. No two states' written laws, regulations, and
policies specifying eligibility conditions are identical, and differences in these conditions
influence the potential for error. States have developed many different ways to determine
monetary entitlement to UI. Additionally, nonmonetary requirements are, in large part,
based on how a state interprets its law. Two states may have identical laws, but may
interpret them quite differently. States with stringent or complex provisions tend to have
higher improper payment rates than those with simpler, more straightforward provisions.
UI benefit payments included in BAM in calendar year (CY) 2007 increased to nearly $32.3
billion, compared with $30.2 billion in CY 2006. CY 2007 BAM paid claims results are
based on the 24,802 sample cases. This represents a completion rate of 99.96 percent.
BAM auditors completed claimant interviews for 88.81 percent of the cases. The remaining
audits were completed based on information obtained from agency records, the claimants’
former employers, and third-party sources, such as labor unions and private employment
agencies.
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No single measure can reflect all aspects of UI benefit payment integrity. DOL uses six
analytical measures to assess payment accuracy and estimate the risk of erroneous denial
of benefits.
BAM Operational Rate (5.62%) - The BAM operational overpayment rate includes those
overpayments that the states are reasonably expected to detect and establish for recovery --
fraud and nonfraud recoverable overpayments, excluding work search, employment service
(ES) registration, base period wage issues and miscellaneous causes, such as benefits paid
during a period of disqualification, redeterminations, and back pay awards. Nationally, BAM
estimates the operational rate dollars overpaid equals $1.820 billion.
BAM Annual Report Rate (9.13%) - The Annual Report rate includes fraud, nonfraud
recoverable overpayments, nonfraud nonrecoverable overpayments, official action taken to
reduce future benefits, and payments that are technically proper due to finality or other
rules. The rate excludes payments determined to be "technically" proper due to law/rules
requiring formal warnings for unacceptable work search efforts. All causes and responsible
parties are included in this rate. Nationally, BAM estimates that $2.958 billion in benefit
payments were overpaid.
Agency Responsibility (2.36%) - This rate includes overpayments for which the state
agency was either solely responsible or shared responsibility with claimants, employers, or
third parties, such as labor unions or private employment referral agencies. The rate
includes fraud, nonfraud recoverable overpayments, nonfraud nonrecoverable
overpayments, official action taken to reduce future benefits, and payments that are
technically proper due to finality or other rules. Nationally, BAM estimates SWAs had
contributory responsibility for $763.0 million in benefits overpayments.
Fraud (2.73%) - The definition of unemployment compensation fraud varies from state to
state. The rate includes all causes and responsible parties. Nationally, BAM estimates that
$883.6 million in benefit payments were fraudulently claimed.
Underpayment Rate (0.65%) - As a percentage of UI benefits paid, BAM estimates the
underpayment rate was 0.67 percent or $210.9 million.
Improper Denial Rates - BAM estimates the adjusted improper denial rates to be 10.72%
for monetary denials, 5.17% for separation denials, and 9.90% for nonseparation denials.
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages): Integrity Rates - CY 2007 - all states.xls.
I. Paid Claims Accuracy
BAM captures 110 data elements for each sampled payment or denial and DOL uses these
elements to produce the various integrity rates listed. Data for nine of these elements are
completed only for erroneous payments or denials. The following chart summarizes four
paid claim accuracy (PCA) rates, which are used for calculating overpayment estimates.
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UI Benefit Payment Integrity Rates
5.94%
Operational
5.62%
9.99%
Annual Report
9.13%
Agency 2.93%
Responsibility 2.36%
2.71%
Fraud
2.73%
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11%
Percent of UI Benefits Overpaid
CY 2007 CY 2006
Each integrity rate represents a different view of the BAM data set. The BAM data construct
provides multiple perspectives; and payment errors may be included or excluded for a
specific rate (See Methodology and Program Description Integrity Rate definitions).
BAM Operational Overpayment Rate
The BAM operational rate is a component of the performance indicator that measures the
detection of recoverable overpayments, which is one of five UI program performance goals
that the Employment and Training Administration (ETA) has set as part of its Government
Performance and Results Act (GPRA) plan. These goals reflect the UI program’s benefit
payment, tax, and reemployment facilitation responsibilities. Additional information on ETA
goals can be found in the U. S. Department of Labor’s Strategic Plan for Fiscal Years 2006-
2011 at: http://www.dol.gov/_sec/stratplan/main.htm.
The overpayment detection measure is also a Core Measure for UI Performs, the UI
performance management system. The overpayment detection measure covers a three-
year period for the UI Performs Core Measure and a one-year period for the GPRA
measure. The measure is defined as the percentage of recoverable, detectable
overpayments estimated by BAM that state Benefit Payment Control (BPC) operations
establish for recovery.
Overpayments Established (BPC)
Overpayment Detection Measure = X 100
Estimated Overpayments
(BAM Operational Rate)
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The operational rate represents that portion of total overpayments that state BPC operations
should be able to detect and establish for recovery. The operational rate was developed
following an extensive analysis of BAM overpayment data. State and national overpayment
detection measure data can be found at the following links:
GPRA Measure- http://www.workforcesecurity.doleta.gov/unemploy/gpra.asp
Core Measure - http://www.workforcesecurity.doleta.gov/unemploy/3yr_overpay.asp
The following charts show the cause components of the operational rate and the types of
overpayments excluded from the operational rate.
Operational Overpayments
Overpayments included in the operational rate constitute over 60 percent of all UI benefit
dollars overpaid in CY 2007. Slightly less than half of the operational overpayments involve
unreported or misreported benefit year earnings. Separation issues account for
approximately three-tenths of the operational overpayments, followed by issues related to
the claimant’s ability to work and availability for work (A&A). The “Other Eligibility” category
includes refusal of suitable work, self-employment, alien status, identity theft, and reporting
issues (failure to appear as requested by the state agency to provide information related to
the UI claim).
Distribution of UI Overpayments
(CY 2007 Distribution of Operational Rate Causes)
BY Earnings
30.2%
Operational
Excluded Able & Available
Overpayment
Overpayments 7.3%
Rate
38.5% Separation Other Eligibility
61.5%
Issues Issues
18.1% 3.2%
Deductible
Income Issues
2.1%
Dependents
0.6%
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Operational Overpayment by cause - all states CY 2007.xls
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Overpayments Excluded from the Operational Rate
Several overpayment causes are excluded from the operational rate because either 1) state
agencies are unlikely to detect these overpayments through the methods commonly
employed by BPC (for example, crossmatches of UI claimant Social Security Numbers with
wage record and New Hire Directory data, appeals reversals, and tips or leads); or 2) the
cost of pursuing these overpayment errors exceeds the amount of benefits that can be
recovered. Work search issues (14.8 percent of all overpayments), Employment Service
(ES) registration issues (7.5 percent), and base period wage issues (6.1 percent) constitute
the majority of the excluded causes.
After the exclusions by cause, the residual 10 percent of UI overpayments are excluded
because they are unrecoverable, because either 1) the time that has elapsed between the
overpayment and its detection exceeds the period established in state law in which an
erroneous payment can be recovered (finality rule); or 2) responsibility for the improper
payment error rests with the agency, employer, or third party, not the claimant. Most of
these nonrecoverable overpayments are separation or continued eligibility issues, such as
the requirement that the claimant is able and available for work.
Distribution of UI Overpayments
(CY 2007 Overpayments Excluded From Operational Rate)
Work Search
Issues
14.8%
Nonrecoverable
Overpayments Overpayments
Operational
Excluded 8.0%
Overpayments
from
61.5% ES Registration
Operational
7.5%
Rate
38.5% Base Period Wages
6.1%
Other excluded
causes
2.0%
Annual Report and Operational Rate Time Series
The following chart displays the annual report and operational overpayment rates by
calendar quarter. For the period CY 2003 to CY 2007, the average annual report rate was
9.68 percent, and the average operational rate was 5.50 percent.
The chart displays the contrast between these two rates and the impact of excluding the
payment errors that are considered “not detectable by normal means” or are cost prohibitive
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to establish and recover.
Annual Report and Operational Rates
By Calendar Year Quarter
11.0%
Percent Ovepaid
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
20
20
20
20
2003
03
03
03
04.1
.2
.3
.4
20
20
20
20
2004
04
04
05.1
.2
.3
.4
.1
20
20
20
2005
05
05
06
06.2
.3
.4
.1
.2
20
20
20
20
2006
06
07
07
07.3
.4
.1
.2
2007.3
.4
Calendar Quarter
Quarterly Annual Report Rate Mean Annual Report Rate
Quarterly Operational Rate Mean Operational Rate
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
CY 2006-CY2007 Integrity Rate changes.xls
Overpayment Cause by Integrity Rate
The distribution of the causes of UI overpayments varies considerably among the four
integrity rates. The elements included or excluded from the various rates influences this
distribution (See Methodology and Program Description Integrity Rate definitions).
Unreported or misreported benefit year earnings are the leading cause of UI overpayments.
They account for over 58 percent of UI fraud overpayments, just under half (49 percent) of
the overpayments defined by the operational rate, and nearly 30 percent of the
overpayments included in the Annual Report rate, but only 8 percent of the amount overpaid
for which the agency had full or partial responsibility.
Separation issues are the second leading cause of UI overpayments. They account for 29
percent of the operational overpayments, 25 percent of the Annual Report rate, and nearly
23 percent of the fraud overpayments. Separation issues are the leading cause of
overpayments for which the agency had full or partial responsibility, accounting for over one-
third of the amount overpaid.
By definition, work search and ES registration issues are excluded from the operational rate,
and account for very small proportions of fraud overpayments. However, ES registration
issues account for nearly one-fifth of the amount overpaid for which the agency had full or
partial responsibility, and 7.5 percent of the amount overpaid included in the Annual Report
rate. Work search issues are a significant cause for the broadest measure of
overpayments, the Annual Report rate (14.8 percent), but are not a significant cause of
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either fraud overpayments (3 percent) or overpayments for which the agency had full or
partial responsibility (5 percent).
Overpayment Cause By Integrity Rate
Percent of the Estimated Dollars Overpaid
Cause Annual Operational Fraud Agency
Benefit Year Earnings 30.52% 49.15% 58.49% 7.68%
Separation Issues 24.67% 29.46% 22.63% 35.77%
Work Search Issues 14.81% N/A 3.12% 4.52%
Able & Available Issues 7.85% 11.80% 9.30% 5.42%
ES Registration Issues 7.54% N/A 0.85% 19.64%
Base Period Wage Issues 6.05% N/A 0.54% 7.99%
Other Eligibility Issues 3.48% 5.27% 3.64% 6.96%
Deductible Income Issues 2.45% 3.37% 0.29% 5.11%
Other Issues 2.04% N/A 1.13% 6.90%
Dependents 0.59% 0.95% 0.00% 0.00%
Total $ Overpaid - Rate $2,958,490,814 $1,820,490,577 $883,615,498 $763,027,864
Able and available issues account for 11.8 percent of the amount overpaid included in the
operational rate, 7.9 percent of the amount overpaid included in the Annual Report rate, 9
percent of the fraud overpayments, and only 5 percent of the agency responsibility rate.
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Annual Overpayment by cause - all states CY 2007.xls,
Operational Overpayment by cause - all states CY 2007.xls,
Fraud Overpayment by cause - all states CY 2007.xls,
Agency Responsible Overpayment by cause - all states CY 2007.xls
Overpayment Responsibility by Integrity Rate
BAM identifies the party or parties responsible for all payment errors. As with cause, the
distribution of overpayment responsibility varies considerably by integrity rate.
Claimants alone were responsible for 60 percent of the dollars overpaid included in the
Annual Report rate. Errors resulting in overpayments that were attributed exclusively to the
state agency accounted for 10 percent of the amount overpaid. The claimant and agency
were jointly responsible for an additional 9 percent of the dollars that were overpaid.
Claimants alone were responsible for 72 percent of the amount overpaid included in the
operational rate. The claimant and agency were jointly responsible for 8 percent of the UI
benefits overpaid under the operational rate definition, and the claimant and employer were
jointly responsible for an additional 10 percent of the operational rate overpayments.
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Responsibility for Overpayments By Integrity Rate
Percent of Total Dollars Overpaid
Annual Rpt. 60% 10% 9% 3% 8% 6% *
Operational 72% 5% 8% * 10% * *
Fraud* 82% * 7% * 9% **
Agency 40% 39% 13% 7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Claimant Agency Clmt. + Agy. Empl. + Agy Clmt. + Empl. Employer Other Resp.
* Less than 2 percent of the overpayments were classified as this responsibility.
Claimants alone were responsible for 82 percent of the fraud overpayments. Claimants
along with employers or agencies were responsible for nearly all of the remainder.
The agency rate is defined by responsible party. The agency was solely responsible for 40
percent of the amount overpaid included in this rate. Agencies shared responsibility with
claimants, employers, or third parties for the remainder.
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Integrity Rates by Responsibility - all states CY 2007.xls
Annual Report Rate Cause and Responsibility - US Total CY 2007.xls
Agency Action Prior to Sample Selection for Overpayments
In the case of payment errors, BAM identifies the action that the SWA took prior to the
sample’s selection. Prior agency action provides additional details on improper payment
responsibility and helps prioritize ways to prevent, reduce, or detect overpayments. At the
time the SWA made payment, BAM found most overpayments were not detectable through
normal agency procedures. For example, without special actions 80 percent of the
operational rate’s $1.82 billion overpaid was not detectable.
However, BAM determined that 20 percent of the operational overpayments were detectable
at the time the payment was made. BAM found that at the time sample was selected the
agency had resolved or was in the process of resolving just over 4 percent of the operational
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overpayments and identified an additional 2 percent of benefit year earnings overpayments
through crossmatch with new hire or wage records investigation. For the remainder (14
percent or $254.7 million) of the operational dollars overpaid, the agency had sufficient
information to identify the overpayment issue but did not resolve the issue, identified the
overpayment issue but took the incorrect action, or did not follow the prescribed procedures
thereby precluding the SWA’s ability to detect the error.
Eighty-nine percent of the overpayments determined to be due to fraud were not detectable
through normal agency procedures at the time the payment was made. Again, BAM found
that special agency actions (e.g. crossmatching with the National Directory of New Hires or
taking additional steps to secure employer information) were required to prevent or detect
these overpayments. The remaining fraud overpayments were distributed among the other
prior agency action categories similar to the operational overpayments.
For overpayments included in the Annual Report rate, a little over 73 percent of the amount
of UI benefits overpaid were not detectable through normal agency procedures. The agency
had sufficient information but did not resolve the issue for six percent of the amount
overpaid or the agency identified the overpayment issue but took the incorrect action for 9
percent of dollars overpaid. At the time BAM selected the sample, the agency had resolved
or was in the process of resolving improper payments constituting three percent of the
amount overpaid. Finally, for six percent of the annual rate dollars overpaid, the agency
failed to follow its own procedures, which precluded the ability to prevent the overpayment.
Agency Action Prior to Sample Selection for Overpayments
Percent of Total Dollars Overpaid
Operational 80% 6% 5% * 4% *
Fraud 89% 4% * *2%*
Annual Rpt. 74% 6% 9% 6% 3% *
Agency * 28% 38% 26% 3%*
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
OP Not Detectable w/o Special Actions Did Not Resolve
Took Incorrect Action Procedures Not Followed
In Process of Resolving Detected by Crossmatch
Other Agency Error
*Less than three percent of total dollars overpaid were identified with this prior agency action.
BAM determined state agencies were responsible (agency rate) for $763 million because
they had full or partial responsibility for the overpayment. Of these, the agency had
sufficient information to identify the overpayment issue but did not resolve the issue for 28
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percent of the amount overpaid; took the incorrect action for 38 percent, and did not follow
procedures for 26 percent of the amount overpaid. The remaining overpayments for which
the agency had full or partial responsibility were either not detectable through normal
procedures at the time the payment was made or the agency had resolved or was in the
process of resolving improper payments.
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Prior agency action for all integrity rates_CY2007.xls
Employer Action Prior to Sample Selection for Overpayments
In the case of payment errors, BAM identifies the action that the employer took before the
payment was selected for the BAM sample. Prior employer action provides additional
details on improper payment responsibility and helps prioritize ways to prevent, reduce, or
detect overpayments. As discussed in the previous section, BAM considers a large majority
of the overpayments included in the annual report, operational, and fraud rates to be
undetectable by the agencies during their usual payment administration processes, and thus
prohibitively expensive for the agency to prevent. However, BAM detects the majority of its
payment errors through the verification of claim information with employers.
Although claimants provide most of the information that agencies use in determining
eligibility for UI benefits, employers also provide critical information to the agencies. For
example, employers provide wage information, which is used to calculate the claimants’
weekly benefit payments; respond to notices of new initial and additional claims by providing
information on the reason for the claimant’s separation; submit notices of new hire, which
agencies use to detect claims filed by individuals who have returned to work; and provide
detailed information that may corroborate or contradict claimant provided information on
issues that affect eligibility, such as availability for work, work search, and job refusal.
BAM data show that prior employer action is a critical factor in the agency’s ability to prevent
or detect many overpayments. BAM records the following employer actions:
• Employer provided adequate information to SWA in a timely manner for
determination.
• Employer provided adequate information after due date for determination.
• Employer provided inadequate/incorrect information in a timely manner for
determination.
• Employer provided inadequate/incorrect information after due date for determination.
• Employer did not respond to request for information.
• Employer, as an interested party, was not requested by agency to provide
information for determination.
• Not an employer-related issue.
Because the state agency uses employer provided information in its eligibility
determinations, the accuracy and timeliness of this information affect whether benefits were
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properly paid. For each payment error, BAM assigns a code to indicate action(s) taken by
the employer affecting the payment error issue as of the date that the sample was selected.
BAM estimates that employers may contribute to 21.5 percent of the overpayments included
in the annual report rate, 19.3 percent of the operational rate dollars overpaid, 13.7 percent
to the fraud rate dollars overpaid, and 21.3 percent of the overpayments included in the
agency rate.
CY 2007 Integrity Rates - Dollars Overpaid by Prior Employer Action
Annual Report Operational Fraud Rate Agency Rate
Overpayments Rate Overpayments Overpayments
by Prior Overpayments by Prior by Prior
Employer action as of the time that Employer by Prior Employer Employer
the payment was selected for audit Action Employer Action Action Action
Not An Employer Issue $1,547,711,257 $841,665,246 $440,900,299 $307,403,737
Agency Did Not Request $426,920,702 $395,941,032 $230,760,257 $71,743,782
Adequate & Timely $349,229,548 $230,774,859 $90,548,851 $221,403,962
Employer Did Not Respond $284,870,718 $202,687,794 $72,687,103 $76,253,642
Emp. Provided Inadequate Info. $252,768,763 $77,141,179 $17,434,793 $64,553,590
Emp. Response Not Timely $76,312,915 $56,597,651 $26,980,128 $13,418,226
Emp. Inadequate & Untimely $20,676,911 $15,682,815 $4,304,065 $8,250,925
Total Estimated Overpaid $2,958,490,813 $1,820,490,576 $883,615,499 $763,027,863
Total $ Employer action which
$634,629,307 $352,109,439 $121,406,089 $162,476,383
contribute to Overpayments
Total $ Employer action which
contribute to Overpayments / 21.5% 19.3% 13.7% 21.3%
Total $ Overpaid
The highlighted sections show estimated overpayments where a different employer action in
response to a claim may have produced a different outcome. In other words, overpayments
may have been prevented or reduced.
One element stands out in Agency Responsible error rates. For 9.4 percent of the total
dollars overpaid or approximately $71.7 million, BAM found that the SWAs did not request
information from employers who were an interested party to a determination.
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Prior Employer Action for all integrity rates - all states CY07.xls
Point of Detection
BAM records the point in its audit process at which it first detects a payment error. Within
this framework, it is important to note that the audit process differs substantially from normal
UI operations in terms of cost, time, and effort. BAM exhausts all avenues in obtaining
information while UI operations make reasonable attempts. BAM detects most payment
errors by verifying base period wages, benefit year earnings, and separation information
with employers. The data suggest that taking additional steps to secure employer
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information or to conduct more in-depth claimant interviews may influence overpayment
amounts.
Annual Report Overpayments by Point of Detection -- CY 2007
Claimant Interview
Wage/ Earnings/ $591,334,560
Separation 20.0%
Verification
$1,322,785,552
44.7%
UI Records
$519,059,340
17.5%
Wage Record
Crossmatch Work Search
$13,709,235 ES Records Verification
0.5% $160,495,340 $192,484,601
5.4% 6.5%
New Hire
Union Verification
Crossmatch
$33,890,019 3rd Party Verification
$68,036,019
1.1% $56,696,148
2.3%
1.9%
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Annual Rate Point of Detection - all states CY 07.xls
Annual & Operational_Overpaid_By_Point_of_Detection_and_Cause.xls
Point_of_Detection_and_Prior_Employer_Action_CY07.xls
Key Week Action Rates
For each paid UI week investigated, referred to as the Key Week (KW), BAM records
whether the payment was proper or improper and, if improper, the type of erroneous
payment. The coding of BAM audit findings must be consistent with the laws, rules and
written policies of the SWA. DOL uses these KW action codes to develop the payment
integrity rates discussed throughout this analysis. These integrity rates are defined in
“Methodology and Program Description”.
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Key week action overpayment rates highlight differences in state laws. For example, state
laws on work search requirements and determination finality provisions differ significantly.
States may also differ in the way they interpret and apply seemingly identical work search
and other UI eligibility requirements. State agency administrators and legislators may use
key week action error overpayment rates in setting policy priorities or identifying procedural
constraints that affect claimstaking. Aggregate CY 2007 data for all states are displayed in
the following chart.
Errors by Key Week Action Code - Percent of Benefits Paid CY 2007
Proper Payments
89.20%
BAM Overpayment
Fraud
Reversed
2.73%
0.01%
Nonfraud
Technically Proper - Recoverable
Other 4.7%
0.58%
Nonfraud
Work Search Formal Technically Proper
Nonrecoverable
Warning - Finality
0.4%
1.66% 0.8%
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages): key_week_action_overpayments.xls
Because state laws vary, state-level data are displayed with warnings not to compare
individual state integrity rates.
II. Underpayments and Denied Claims Accuracy
Underpayment Rate
IPIA requires estimates of underpayment rates, as well as overpayments. BAM estimates
that $210.9 million was underpaid in CY 2007, compared with $202 million in CY 2006. As a
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percentage of UI benefits paid, the CY 2007 national underpayment rate of 0.65 percent is
essentially unchanged from CY 2006 rate of 0.67 percent. State underpayments ranged
from 0.03 percent in Indiana to 1.99 percent in Louisiana.
Errors in reporting or
recording base period wages Annual Report Underpayments by Cause
accounted for just under 70
percent of the amount Base Period
underpaid and represented Wage Iss.
$143,993,254
0.44 percent of the amount
68.3%
of UI benefits paid.
Employers report employee
wages to SWAs each
calendar quarter. State
agencies use these wages Benefit Year
to establish a claimant’s Earnings
base period, which in turn is Other Issues
$33,821,230
used in the calculation of $26,652,141
16.0%
12.6%
weekly benefit amounts and
maximum benefit amounts
(See Base Period Wage
Report for individual state
findings). Deductible
Income
Errors in reporting or $6,410,009
recording benefit year 3.0%
earnings were the second
leading cause of Annual Report Underpayments by Responsibility
underpayments – 16.0
Employer Only
percent of all underpayments $78,058,724
and 0.10 percent of UI 37.0%
benefits paid. Generally, Agency Only
claimants can work and earn $23,594,736
11.2%
wages while collecting UI Claimant Only
benefits as long as they $45,565,884 Claimant +
Employer
report their earnings. 21.6%
$26,019,575
However, weekly UI 12.3%
payments may be adjusted
based on claimant reported
earnings. For many of these
underpayments, the claimant
All Others
may have over reported their $3,626,715 Claimant + Agency
weekly earnings and because 1.7% Employer + Agency $15,413,541
Clmnt+Empl+Agy $12,925,445 7.3%
of this error, BAM found that $5,650,929 6.1%
2.7%
UI benefit amount paid was
too small.
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Employers alone were responsible for almost 37 percent of amount underpaid, which
represented 0.24 percent of the amount of UI benefits paid. Claimants alone were
responsible for an additional 21.6 percent of the amount underpaid, which represented 0.14
percent of the amount of UI benefits paid. Because SWAs often send out confirmations to
the claimant and base period employers at the time of monetary determination,
responsibility for these types of underpayments are highly distributed.
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages): Underpayments_CY_2007.xls.
The underpayments estimated from BAM paid claims samples represent underpayments
only for those claimants eligible for unemployment compensation. Underpayments also
result when claims for UC are erroneously denied. Each week, BAM units in the SWAs
select samples of denied UC claims from three populations, defined by the type of issue on
which a benefit denial was based -- monetary, separation, and nonseparation (continued
claim filing eligibility). Denied Claim Accuracy (DCA) measures the accuracy of disqualifying
monetary, separation, and nonseparation determinations for both intrastate and interstate
claims.
Denied Claims Accuracy Rates
IPIA requires estimates of improper denial rates. Unlike the investigation of paid claims, in
which all prior determinations affecting claimant eligibility for the compensated week are
evaluated, the investigation of denied claims is limited to the issue upon which the denial
determination is based. DCA investigators verify facts contained in the case file, obtain any
missing information, as well as conduct new and original factfinding that may be relevant to
the denials determination. The DCA audits record error information in a manner similar to
PCA: Dollar Amount of Error, Error Issue Action Code, Error Cause, Error Responsibility,
Error Detection Point, Prior Agency Action, Prior Employer Action, DCA Action Appealed,
and Prior Claimant Action.
Monetary Denials
State workforce agencies determine the monetary eligibility of claimants when they file a
new initial claim or a transitional claim. In CY 2007, SWAs determined that 88.7 percent of
the 11.37 million new initial and transitional claims were monetarily eligible.
BAM estimates that 15.8 percent of the 1.06 million monetary denials included in the BAM
DCA population were improper. This compares to an improper denial rate of 15.3 percent in
CY 2006. The difference of 0.5 percentage points is less than the expected differences in
rates due to sampling and therefore is not statistically significant. These UI claims were
denied because the agency had initially determined that the claimant had not earned
sufficient wages in employment prior to being unemployed or failed to meet other
requirements for monetary eligibility, such as sufficient earnings in a minimum number of
weeks. The BAM DCA audit identified additional wage credits or an alternate or extended
base period for these claimants that had not been included in the original monetary
determination or identified other errors in the original determination.
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For many of these improper monetary denials, the state agency had identified the additional
wages and issued a redetermination establishing eligibility independent of the BAM
investigation, or the initial denial was reversed on appeal. When the rate is adjusted for
these redeterminations and appeals reversals, the improper denial rate for monetary
determinations drops to 10.7 percent, approximately 114,100 of the 1.06 million who were
monetarily denied. This rate compares with an adjusted improper denial rate of 10.5
percent in CY 2006; the difference of 0.2 percentage points is not statistically significant.
Separation Denials
In order to be eligible for unemployment compensation, claimants must be unemployed due
to no fault of their own, discharged for non-disqualifying reasons, or must have voluntarily
left employment for a non-disqualifying reason provided in state law, such as workplace
harassment, domestic violence, or to relocate with a spouse. Agencies conduct
determinations of eligibility when a separation issue has been identified. The agency
gathers information from the claimant, employer, and relevant third parties. Based on the
findings of fact and the application of state laws, SWAs issue a determination of eligibility.
Separation issues normally are identified when a new initial claim or an additional claim is
filed. In CY 2007, there were approximately 10.1 million monetarily eligible new initial claims
and approximately 6.5 million additional claims. No separation determinations were
conducted for nearly three-fourths of these claims, because the reason for separation was
lack of work. State agencies completed just over 4.1 million separation investigations and
found disqualifying circumstances in 1.99 million of these determinations that resulted in
denial of benefits.
In CY 2007, BAM estimated that 8.0 percent of the 1.97 million separation denials included
in the BAM DCA population were improper, compared with 8.8 percent estimated for CY
2006. When redeterminations and appeals reversals are taken into account, the improper
denial rate for separations decreases to 5.2 percent, compared with 5.9 percent in CY 2006.
Neither difference is statistically significant. Nationally, BAM estimates that approximately
102,000 of the 1.97 million separation denials subject to BAM audit were incorrectly
decided.
Nonseparation Denials
Nonseparation issues include the claimant’s ability to work and availability for work,
disqualifying and unreported earnings and income during the benefit year, failure to meet
work search requirements, and failure to report as required by the state agency to provide
information related to the UI claim or to receive reemployment services. There is often a
distinction between issues that result in disqualification and issues that result in a specific
number of weeks of ineligibility. A disqualified worker has no right to benefits until s/he
requalifies, usually by obtaining new work or by serving a set disqualification period. In
some cases benefits and wage credits may be reduced. An ineligible worker is prohibited
from receiving benefits until the condition causing the ineligibility ceases to exist. Eligibility
issues are generally determined on a week-by-week basis. Although nonseparation issues
can be detected at various points in the UI claims taking process, these issues generally
affect the claimant’s eligibility for continued claims of UI.
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In CY 2007, claimants requested payment or “claimed” 136.3 million weeks. Approximately
11.5 percent of UI weeks claimed were not paid, and no nonseparation determination was
conducted. These include weeks for which the claimant did not contest the conclusion of
the UI claims taker that the week should not be paid. SWAs made payments for 118.5
million weeks. SWAs completed 3.15 million nonseparation determinations and concluded
that 2.26 million of those investigations should result in denial of benefits.
For the 1.98 million nonseparation denials included in the DCA population, BAM estimates
an improper denial rate of 13.7 percent and the adjusted improper denials rate of 9.9
percent.
Overpayments and Proper Denials
BAM determined that small percentages of the separation (0.18 percent) and nonseparation
(1.57 percent) denials resulted in overpayments. Overpayments can occur if the period of
disqualification for UI benefits was less than it should have been, and the claimant received
compensation during the period that he or she should have been ineligible for benefits.
Overpayments can also occur if the claimant received a partial payment that was too large.
A partial payment is a reduction in the claimant’s weekly benefit amount and is issued when
the claimant has earnings or other deductible income for weeks that he or she claims UI
benefits. For some of these compensated weeks, the BAM audit identified additional
income that reduced benefits further or in some cases eliminated eligibility for benefits
entirely.
For small percentages of all three types of denials, BAM concluded that the claimant was
properly denied but the agency committed a procedural error, such as basing the
determination on the wrong reason or section of the law or applying incorrect dates to the
period of denial. For example, a claimant may have been denied because of a monetary
determination that the claimant had earned insufficient wages in the minimum number of
weeks required by state law. The BAM audit determined that the claimant did meet the
minimum weeks test, but was still ineligible due to insufficient total wage credits earned in
the base period. For separation and nonseparation determinations, these errors typically
involve citing the wrong issue in the determination (for example, availability versus
reporting).
DCA Rate Table
The following table summarizes the DCA rates for the three denial categories described.
CY 2007 US Denied Claims Accuracy Rates
Denial Type BAM Sample Improper Adjusted Over Proper
Population of Rate* Improper Paymen Denial***
of Denials Denials Rate** t
Monetary 1,064,216 7,650 15.78% 10.72% 0.00% 0.53%
Separation 1,970,383 7,997 8.05% 5.17% 0.18% 3.39%
Nonseparation 1,978,520 7,992 13.69% 9.90% 1.57% 4.01%
Notes:
In several states, the population from which the BAM DCA samples were selected may not include
all of the determinations that meet the definition for inclusion in the DCA population. This limits the
- 17-
degree to which inferences about the population can be made from BAM DCA data. States are in
the process of resolving these population issues.
* Improper rate is the percentage of denied claims that BAM DCA concluded were erroneous,
whether or not official agency action was taken to issue payment or increase claimant’s WBA, MBA
or remaining balance.
** Adjusted improper rate excludes erroneous denials that were corrected by the agency and claims
for which eligibility was established on appeal prior to DCA case completion.
*** Properly denied, but BAM identified a procedural error, such as basing the determination on the
wrong reason or section of the law or applying an incorrect period of denial.
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Denied_Claims_Accuracy_&_ Error Rates_CY_2007.xls
Agency Action for Improper Denials
Not every improper denial results in the agency issuing a payment to the claimant (or
increasing the claimant’s weekly benefit amount, maximum benefit amount, or dependents’
allowance). Agencies or BAM took action to insure that benefits were paid for just over 68
percent of the improper monetary denials. However, 44 percent and 43 percent of the
claimants improperly denied for separation and nonseparation issues respectively, received
benefits. In some cases claimants are ineligible for payment due to other disqualifying
issues. In other cases the agency is precluded from taking action because of the time that
has elapsed since the denial was issued (determination finality rules) or by other provisions
of the law.
BAM records the following agency actions:
• Official Action - Agency or BAM took action to issue payment;
• No Payment Due - Claimant was not entitled to payment due to other disqualifying
issue or the claimant did not file a claim for the week(s), which were improperly
denied;
• Other Improper - No official action could be taken due to finality or other provisions of
state law;
• Overpayment - Claimant received payment for weeks of unemployment to which he
or she was not entitled;
• Procedural Error - Claimant properly denied, but BAM identified a procedural error on
the part of the agency.
The following table summarizes the denial error rates by outcome and whether agency
action was possible.
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Agency Action - Improper Denial Outcome or Finding
Percent of Action for Denial Errors
Improper Improper Improper Proper Denial
Denial Denial Denial Overpayment - Wrong
Improper
Official No Payment Unable to Payment Not Reason or
Denial Type
Action To Due / Take Official Due Procedural
Pay Not Entitled Action Error
Monetary 68.67% 16.55% 11.53% 0.00% 3.25%
Separation 44.23% 9.29% 15.75% 1.55% 29.17%
Nonseparation 42.77% 18.92% 9.28% 8.14% 20.89%
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Agency_Action_for_Improper_Denials_CY_2007.xls
Responsibility for Improper Denials
The party responsible for erroneous denials varies by type of denial determination.
Employers were solely responsible for almost 25 percent of the erroneous monetary denials
due to misreporting or underreporting employees’ wages. Claimants were responsible for
another 26 percent of the erroneous monetary denials, and agency error accounted for 13
percent of the improper monetary denials.
Responsibility By Type of Denial
Nonseparation 37% 38% 1% 13% 2% 4% 4%
Separation 8% 52% 4% 8% 13% 8% 7%
Monetary 26% 13% 25% 7% 7% 16% 7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Claimant Agency Employer Claim + Agy Empl + Agy Claim + Empl Other
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The state agencies were solely responsible for the 52 percent of the incorrect separation
denials and 38 percent of the improper nonseparation denials. Employers and the state
agencies were jointly responsible for 13 percent of the erroneous separation denials.
Claimants were responsible for over a third of the erroneous nonseparation denials.
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Responsibility_For_Improper_Denials_CY_2007.xls
Prior Agency Action for Improper Denials
Because the state agencies, either solely or jointly with other parties, are responsible for the
majority of the erroneous nonmonetary denials and for a significant proportion of the
monetary denials, it is instructive to examine agency action prior to the DCA investigation.
Agencies had resolved or were in the process of resolving 30 percent of the erroneous
monetary denials. However, 44 percent of the improper monetary denials could not be
detected through the normal claims taking procedures. Typically, these are claims for which
the employer incorrectly reported the wages or the claimant failed to inform the agency that
he or she had out-of-state wage credits. Therefore, the agency issued the monetary denial
based on the best information available at the time of the initial determination. For improper
nonmonetary denials, the agency identified the issue but took the incorrect action for 40
percent of the improper separation determinations and 44 percent of the erroneous
nonseparation determinations.
Prior Agency Action By Type of Denial
Nonseparation 29% 22% 40% 3% 6%
Separation 17% 17% 56% 6% 3%
Monetary 44% 30% 5% 14% 6%
0% 20% 40% 60% 80% 100%
Issue Not Detectable In Process of Resolving Incorrect Action
Did Not Resolve Procedures Not Followed
Although the agency followed its procedures, the issue or information was undetectable for
17 percent of the improper separation determinations and 29 percent of the erroneous
nonseparation determinations. For these claims the agency issued its determination to deny
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eligibility based on information that, although incomplete, was the best available under
normal procedures at the time of its decision.
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Prior_Agency_Action_For_Improper_Denials_CY_2007.xls
Separation Issues
A majority of the separation denials concerned voluntary quits (VQs), while discharges
accounted for most of the balance. “Other” includes a small number of labor disputes,
military separations, or claimants who were still job attached (partial unemployment).
Claims that were denied for
discharge issues were Separation Denial Issues
somewhat more likely to be in
error than denials issued for
VQs. More than eight percent
Voluntary
of discharge denials were Discharge
Quit
improper, compared with 7.7 45.6%
percent of the VQ denials. Just 53.4%
over eight percent of the
separation denials that were
based on “Other” issues were
incorrect. The following chart
display these separation error Other
rates by type. 1.0%
Separation Error Rates By Issue
Other 8.34%
Voluntary Quit 7.74%
Discharge 8.40%
7.0% 7.5% 8.0% 8.5%
- 21-
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Denied_Claims_Separation_Error_Rates_by_State.xls
Nonseparation Issues
The claimant’s failure to Nonseparation Denial Issues
report as required by the Disqualifying
state agency and provide
Income
information related to the UI Able
18.7%
claim or to receive 11.5%
reemployment services
constituted the largest Available Other+
category of nonseparation 21.4% 10.5%
denials in CY 2007. The
remaining nonseparation Work
denials are distributed Search
among several issues, with 5.0%
able and available issues Reporting
and disqualifying or 32.9%
unreported income issues
collectively comprising the
majority.
The following table shows improper nonseparation denial error rates by the type of issue.
Nonseparation Improper Denial Error Rates By Issue Type
Able 7.2%
Disq. Inc. 10.5%
Reporting 14.8%
Other+ 15.9%
Available 16.4%
Work Search 16.7%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18%
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Determinations that denied eligibility because the claimant failed to meet the state’s work
search requirements had the highest error rate (16.7 percent), although work search issues
constitute only five percent on the nonseparation denials. Denials based on the claimant’s
ability to work had the lowest error rate (7.2 percent).
For a detailed listing of these rates for each state, click on the following link (note: the
spreadsheet may have several pages):
Denied_Claims_Nonseparation_Error_Rates_by_State.xls
Links to Additional BAM Paid and Denied Claims Data and BAM Methodology
Integrity Rates*
• Integrity Rates CY 2007 - all states.xls
• CY2006 - CY2007 RATE changes.xls
Integrity Rates - Cause / Responsibility*
• Annual_Overpayment_by_cause_all_states.xls
• Operational_Overpayment_by_cause_all_states.xls
• Fraud_Overpayment_by_cause_all_states.xls
• Agency_Responsible_Overpayment_by_cause_all_states.xls
• Integrity_Rates_by_Responsiblity_all_states.xls
• Annual_Report_Rate_Cause_and_Responsibility-US_Total_CY07.xls
Integrity Rates - Prior Action / Point of Detection*
• Prior agency action for all integrity rates
• Prior_Employer_Action_for_all_integrity_rates_all_states CY07.xls
• Annual_Overpayments_by_Point_of_Detection_all_states_CY07.xls
• Annual & Operational_Overpaid_By_Point_of_Detection_and_Cause.xls
• Point_of_Detection_and_Prior_Employer_Action_CY07.xls
Key Week Action Rates*
• Key week action overpayments
Underpayments and Denied Claim Accuracy*
• Underpayments_CY_2007.xls
• Base_Period_Wages_Report_by_State_CY_2007.xls
• Denied_Claims_Accuracy_&_ Error Rates_CY_2007.xls
• Agency_Action_for_Improper_Denials_CY_2007.xls
• Responsibility_For_Improper_Denials_CY_2007.xls
• Prior_Agency_Action_For_Improper_Denials_CY_2007.xls
• Denied_Claims_Nonseparation_Error_Rates_by_State.xls
• Denied_Claims_Separation_Error_Rates_by_State.xls
BAM Methodology
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• BAM Integrity Rate Definitions and Methodology
• BAM State Contacts
• ET 395 Handbook 4th Edition BAM State Operations Guidance
• Electronic Code of Federal Regulations - Quality Control in the Federal State
Unemployment Insurance System
Other References
• Comparison of State Unemployment Laws
• Significant Provisions of State Unemployment Insurance Laws
• ET 301 Handbook 5th Edition - nonmonetary determination guide sheets
Performance Measures which use the BAM Operational Rate
• GPRA Measure- http://www.workforcesecurity.doleta.gov/unemploy/gpra.asp
• Core Measure - http://www.workforcesecurity.doleta.gov/unemploy/3yr_overpay.asp
• Calculation of the Core Measure
*The Excel spreadsheets may have several pages of data.
Prepared by:
U. S. Department of Labor
Employment and Training Administration
Office of Workforce Security
Division of Performance Management
August 2008
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- bam-cy2007.pdf
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