By Paige Cunningham
RICHMOND, Va. — Nearly 15 percent of unemployment benefits were paid last year to Virginians who didn’t qualify for them, according to the U.S. Department of Labor.
In 2009, Virginia ranked ninth for how much states overpaid workers claiming unemployment. Of $1.14 billion the state paid in unemployment, $166 million was handed to workers who didn’t qualify.
Louisiana had the highest rate of overpayment, at 42 percent, while Indiana came in second, with 33 percent. Add the states together, and in total 9 percent of all unemployment benefits were paid to unqualified citizens.
Calls on Tuesday to the Virginia Employment Commission were not returned.
George Wentworth, a policy analyst for the National Employment Law Project, describes two main types of workers who are unqualified for unemployment benefits, but may receive them anyway.
Many of the overpayments are given to workers who do lack a job, but it’s because they were fired—not laid-off. Workers who have been fired are not illegible for unemployment benefits, but Wentworth says it can take months for the state to prove that in court, end the payments and demand a refund.
Some states are required to decide appeals within a time period, like 45 days, but many states aren’t staying on schedule as they process extra applicants in the recession. Virginia, Wentworth said, is doing particularly badly in that area.
“It may well be by the time the appeals referee rules, the claimant has had 10, 12 week’s worth of benefits,” Wentworth said. “That’s a fairly common scenario.”
Other workers commit fraud when they do find a job but continue claiming benefits, Wentworth said. In 2008, 2.6 percent of benefits in Virginia were overpaid to employed claimants.
But Wentworth said these cases have dropped in recent years as more states have required employers to give notification when they hire.
“I think most states have developed more sophisticated tools for identifying fraud,” he said.
While Virginia’s payments this year puts the state among those struggling most with overpaying benefits, its ratio of overpayments was even higher in 2008. That year, 24 percent of all unemployment benefits should not have been distributed.
The issue is especially relevant in Virginia now that the state’s unemployment trust fund has run dry. Last September, the fund dipped into the negative for the first time in three decades, prompting Virginia to borrow $347 million from the federal government to continue writing unemployment checks.
And as unemployment remains higher throughout the country, states are experiencing more pressure to pay out benefits, Wentworth said.
“There are three times as many people filing for benefits today as they did three years ago,” he said.
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