Nevada paid out $1.4 billion in improper or fraudulent benefits during pandemic
As the COVID-19 pandemic hammered the Nevada economy and led to a record spike in unemployment, the Department of Employment, Training and Rehabilitation (DETR) paid out an estimated $1.4 billion in improper benefit payments, DETR Director Christopher Sewell told lawmakers Tuesday.
That amounted to more than 10 percent of the more than $12 billion in benefits paid out by DETR during the pandemic, according to Sewell, whom Gov. Joe Lombardo appointed to lead the agency earlier this year. Of those improper payments, Sewell said $644 million were fraud-related.
“The remaining balance of [$]784 million were improper payments. That can be everything from someone that didn't understand a question and we overpaid them, [to] someone that had a vacation time that didn't claim it,” he said during a budget presentation from the department. “I’m gonna also be very upfront — could that be some of our mistakes? Yep. We're gonna get that money back that we can.”
Those excess payments came as DETR had to balance the need to push benefits out the door to provide immediate help for tens of thousands of desperate Nevadans left without jobs against the need to run through checks and balances on the front end to ensure payments were not made for fraudulent claims.
Beyond normal unemployment insurance benefits, the pandemic saw additional benefits paid out including payments for self-employed workers and independent contractors through the Pandemic Unemployment Assistance and 13 extra weeks of benefits from the Pandemic Emergency Unemployment Compensation program.
Despite the errant payments, Sewell added that the agency prevented $2.5 billion in benefits from going out improperly. Those prevention efforts were tied to ID requirements put in place months after the start of the pandemic. Of the money improperly paid out, Sewell said 80 percent came from federal funds, and 20 percent were state funds.
But as the agency seeks to recoup some of those improperly paid benefits and funds lost to fraud, Sewell said the department is giving grace to 10,000 Nevadans who were overpaid, noting that the Department of Labor granted DETR permission to do so.
Altogether, the department is waiving $4.5 million in overpayments, meaning those 10,000 claimants will not have to pay back benefits they were improperly given. Sewell said DETR is in the process of notifying those people of the waivers, but the department has about 6,000 more waivers to process.
“I don't have a good time estimate on that,” he said. “These overpayment[s] and the waivers are high priority for us.”
The agency is still in the midst of processing other major backlogs, including more than 13,000 adjudication cases and 33,000 appeals.
For the adjudication cases — which involve determining whether an individual filing for benefits qualifies for them — Sewell said he expects the agency to work through the backlog of claims within four months, or hopefully sooner. But as the agency catches up, the backlog means delayed benefits for people out of work.
Still, the process is already speeding along more quickly than Sewell initially projected. In early February, he told lawmakers that the backlog of adjudication cases would take six months to process.
For the large number of outstanding appeals — which are requests for reconsideration of a claim for benefits that has been denied — DETR plans to bring on more help. That includes contracting with a third party vendor for assistance and hiring former DETR employees who “are very fluent at appeals” to handle cases.
Sewell said in February that the appeals backlog would take four years to process if he did not implement extra steps to tackle those cases, but now the agency is set to catch up on the backlog by the end of the year.
“I hope to get it done a lot quicker because I’m embarrassed. I’m embarrassed for every Nevadan. Why should they have to wait this long to get unemployment? It shouldn’t happen. We’re gonna get it fixed,” he said.