ALBANY — A state comptroller's audit released Tuesday confirmed a multitude of deficiencies in the Department of Labor's oversight and management of its unemployment insurance system that led to widespread fraud during the coronavirus pandemic, when applications surged as millions of people were unable to work.
"During the pandemic, faced with the high demand for UI benefits and the need to process claims quickly, the department resorted to stop-gap measures to compensate for system limitations, which ultimately proved to be costly to the state," the audit states. "We found its workarounds resulted in misclassification of claims as state instead of federal liabilities, overpayment of claims, and supplemental spending to maintain the outdated UI system infrastructure while the new system was in development."
The audit noted that the Department of Labor was also "unable to provide us with granular data or analyses to support their management of and response to fraudulent claims on the UI system, including: support for $36 billion in fraudulent claims reported by the department as prevented." In the wake of the pandemic, the Department of Labor has issued periodic statements claiming it had uncovered tens of millions of dollars in fraudulent claims, though it's unclear how much of any fraudulent payments have been recovered.
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