Concealment charges and collections

As noted in February of this year, concealment cases jumped to 2.79% of all unemployment benefits paid out. For the three previous years, concealment cases had always been under 2% of all unemployment benefits paid.

NOTE: a 0.8% increase is remarkable and unprecedented. If such a change in the unemployment rate or GDP took place from one year to the next, that change would receive headlines across the state.

Because 2015 collection data was not available at the time of the February post, I estimated how much concealment money the Department was taking in for 2014 when compared to previous years. That estimate indicated that concealment monies being collected from claimants was rising markedly.

Now, in 2016, the Department’s updated fraud report is available. This report, furthermore, has data for both how much concealment is being assessed and how much concealment monies are being collected.

In regards to the concealment being assessed, there is good news and bad news.

over-payments assessed

As seen in this chart, over-payments assessed in 2015 declined to 2.21% of unemployment benefits paid out. Still, the concealment charges are over 2% of benefits, so concealment cases remain abnormally high relative to 2011, 2012, and 2013, when the benefits at issue were two to three times greater than the benefits paid out in 2015.

The story with the Department’s collection efforts, on the other hand, is pretty much bad news (except for the impact on Department coffers arising from these collection efforts).

over-payments collected

Here, the concealment over-payments collected in 2011 were under 1% of the benefits paid out that year. In 2012 and 2013, the concealment over-payments collected were under 2% of the benefits paid out. In 2014, however, the concealment over-payments jumped to nearly 3%, and in 2015 concealment over-payment collections climbed to 3.42% of the total benefits paid out that year. In other words, in 2015, out of every $100 claimants received, the Department took back $3.42 in concealment over-payments.

These collection numbers also reveal how concealment collection is a growing part of the Department’s collection efforts. Whereas assessments in 2015 show a slight decline in concealment/fraud assessments to non-fraud assessments — 121.10% in 2014 to 112.69% in 2015 — collections for fraudulent over-payments relative to non-fraud over-payments continued to increase in 2015 — going from 116.52% in 2014 to 140.11% in 2015. In other words, nearly two out of every three over-payment dollars collected in 2015 were for concealment. The Department is becoming VERY good at debt collection and, essentially through concealment, discounting the benefits being paid out to claimants. The problem is that claimants who apply for unemployment benefits are not aware of this “discount” on their benefits until charged with concealment six to twelve months after first filing their unemployment claims.

So, what I wrote in February 2016 remains valid, especially since the definition of concealment has now been changed formally to make claimants liable for any mistakes they make on their weekly claim certifications:

These numbers show a sudden increase in 2014 in concealment cases and this increase accelerated in 2015. In this light, the Department’s push to change the definition of concealment is part of an agenda to expand the scope and reach of concealment. The Department countered in its testimony before the committee that an intent to conceal is still required under its proposed changes to the definition of concealment. The proposed language, numerous posts on this blog, a Commission memorandum, and Kevin Magee’s testimony at the public hearing belie the Department’s assertions. Mistakes are increasingly being charged as concealment by the Department, and Commission review applying the actual concealment standard is the only way to fight these kind of charges.

Essentially, concealment is becoming the modus operandi of the Department’s efforts in administering the state’s unemployment law. Anyone who makes a mistake is at risk of a concealment charge from the Department, and the Department wants to change unemployment law to reflect this practice.