Department of Labor: $290 million paid out for fraudulent unemployment claims
Over $140 million in fraudulent claims were paid out of the state's unemployment insurance program in 2020, the Kansas Department of Labor said Tuesday, with another $150 million in bogus claims coming out of federally funded programs to support out-of-work Kansans.
The figures, which came as part of an internal review conducted by the agency, show that the fraudulent benefits account for about 12% of the roughly $2.4 billion in claims paid out between when the pandemic started in late March and the end of 2020.
Nationally, the U.S. Department of Labor's Office of Inspector General estimates that more than $36 billion has been paid in fraudulent claims, roughly 11% of all claims paid out across the U.S.
The news comes as frustration with KDOL reaches a boiling point, although the agency has said that it has implemented stricter security measures to combat fraudsters.
The agency has been overwhelmed with a historic number of out-of-work Kansans since the COVID-19 pandemic began. That has been compounded by a rash of fraudulent claims, which have been a constant since last year but appear to have escalated in recent weeks.
Republican legislators believe this spike is driven by the state's lax security measures, which they argue makes the state more attractive to crooks. The agency has responded with beefed-up login protocols, which it says has halted over 500,000 fraudulent login attempts since early February, when the measures were put in place
It is unclear what, if anything, the state can do to reclaim the ill-gotten benefits. KDOL said it has referred over 50,300 instances of alleged fraud to federal law enforcement agencies.
“Fraud is unacceptable and will not be tolerated," Gov. Laura Kelly said in a statement. "It’s stealing from taxpayers at the worst possible time and all attempts at fraud will be referred in the strongest possible manner to law enforcement."
For much of 2020, KDOL insisted that fraud was mostly confined to federal unemployment programs set up due to the pandemic, specifically the Pandemic Unemployment Assistance program, which is targeted at gig workers and the self-employed.
The data released Tuesday would appear to contradict that, although Kelly's office was quick to point out that the fraud in Kansas pales in comparison to similar problems in other states. Officials in California, for instance, say they have paid out over $11 billion in fraudulent claims.
But Rep. Sean Tarwater, R-Stilwell, said trust in the agency has been shattered, saying he "wants some of whatever they're smoking."
He pointed to figures showing that KDOL paid out a similar amount in claims in early January as it did in April and May of 2020, when the unemployment rate skyrocketed because of the pandemic, something he argued showed the uptick in fraudulent claimants.
"I can't put a whole lot of faith in their numbers," he said. "There is no way. The numbers don't add up."
Tarwater and his colleagues have clung to an estimate of $700 million in bogus claims paid out, something which Kelly batted away on Monday.
The governor has called for a renewed push to modernize the state's unemployment system, which is widely blamed for making the state more attractive to fraudsters.
Republican legislators have tried to wrestle away control over any upgrades, moving forward with legislation to require a council of lawmakers, business leaders and agency heads to oversee the modernization process.
That legislation was amended Tuesday to require a one-time, outside audit of KDOL and its handling of fraudulent claims. A separate report from the Legislature's auditing arm is underway and legislators are to receive an initial briefing on it Wednesday.
"We can't trust them to give us any numbers," Tarwater said.