#NY Department of Labor stopped over $1B in unemployment fraud amid COVID-19

New York thwarted more than $1 billion in unemployment fraud during the coronavirus pandemic –- as it paid out nearly $40 billion in benefits, the Cuomo administration said Thursday.

The state Department of Labor said that it identified and stopped more than 42,200 fraudulent unemployment benefit claims since COVID-19 hit the Empire State in March.

In the last five months, the agency has referred more unemployment fraud cases to federal prosecutors than it did in the last ten years combined, the DOL said.

“Preying on the welfare of New Yorkers during a global pandemic is a new low,” said Linda Lacewell, the superintendent of the state Department of Financial Services. “We urge every New Yorker to be vigilant and take all necessary precautions to protect your identity and help put a stop to this.”

Fraudsters have been using real New Yorkers’ identities – likely stolen during previous data breaches – in order to file bogus claims and illegally collect benefits in the name of unemployed individuals, the state said.

The fraud announcement was made before lawmakers questioned Reardon Thursday during a joint legislative hearing assessing COVID-19’s impact on New York’s workforce.

Reardon revealed during the virtual hearing that the Department of Labor has paid almost $40 billion in unemployment benefits to 3.3 million New Yorkers since the contagion – which has killed more than 25,000 residents – plagued the state.

About 75 percent of the total payment has come from federal aid, while the other 25 percent came from the state’s unemployment fund.

“In 2019, we paid just $2.1 billion in total,” Reardon told state lawmakers. “In that context, we have paid over 18 years’ worth of benefits in just over five months – that’s staggering and sobering.”

As millions of Empire State residents lost their jobs during the coronavirus pandemic, the “surge” of unemployment applications “crashed on New York like a wave, pushing our systems to the brink,” Reardon explained.

In a typical week before the crisis, the agency’s call center averaged about 50,000 calls, but during a peak week in late March as the pandemic was mounting, it received more than 8.2 million calls, said Reardon.

At one point, the DOL employed over 7,000 workers to man the phones and process applications as it poached other state workers and contracted private call centers, the commissioner said.

Currently, there’s around 4,500 workers still employed to handle the crush as 3.4 million New Yorkers are still receiving unemployment benefits.

“We did everything within our power and authority to cut through the bureaucratic red tape and get New Yorkers their benefits as quickly as possible,” said Reardon.

She added that there’s still non-COVID-19-related unemployment insurance cases waiting to be “adjudicated,” but claims older than three weeks have all been processed.

During the hearing, state lawmakers described a different reality, complaining that their offices are still being inundated with calls from desperate New Yorkers struggling to get through to the DOL.

State Sen. Tom O’Mara (R-Elmira) said “90 percent” of the work his staff does involves handling unemployment inquires.

Assemblyman Robert Smullen (R-Johnstown) added, “There’s been 2,200 legislative inquiries from my constituents — it’s been the number one issue in New York State.”

“It’s been a variety of things since March and here we are middle of August and people are still confused with how to navigate the system,” Smullen railed as he noted some constituents filed unemployment claims over nine weeks ago and still haven’t been contacted.

State Sen. James Skoufis (D-Hudson Valley), who also chairs the Senate Investigations Committee, chimed in, “We can’t be going through the same motions where our offices are getting calls with people crying on the other end because they can’t even get a call back from DOL well after two to three months of waiting.”