The Tribune Democrat, Johnstown, PA

Local News

April 10, 2013

Bill toughens penalties for unemployment fraud

HARRISBURG — The state House of Representatives unanimously approved legislation that would toughen penalties on people who lie to collect improper unemployment benefits.

But the bill worries advocates who represent displaced workers in disputes with former employers. They say that, too often, a determination about whether an unemployed person has intentionally sought improper benefits is a gut call made by an unemployment referee.

In most cases, unemployment case referees will decide that there is no fault in disputes between employers and former workers, said Antonio Lodico, co-director of the Mon-Valley Unemployed Committee, based in Homestead. The committee helps jobless workers who are having trouble getting benefits.

“Over the last two years, we’ve seen more discretion in referees determining that people have made knowingly false statements and what is frightening is that there is no accountability,” Lodico said. “What you are doing is attaching a financial penalty to the judgment call of a civil servant.”

The author of the legislation, Rep. Seth Grove, R-York County, said the federal Department of Labor has estimated there was $117 million worth of unemployment fraud in Pennsylvania in 2011-12.

His bill would increase fines and increase the number of penalty weeks that people are barred from collecting unemployment after they are caught cheating. Grove’s bill also would tack a 15 percent penalty on restitution.  

The measure also bars people from collecting unemployment for a year if they are caught obtaining benefits while in jail.

The state Department of Labor and Industry began targeting unemployment claims by inmates last year. The effort was piloted in Philadelphia then went statewide late in 2012. In January, alone, investigators stopped 1,089 claims by inmates.

A House analysis of the bill estimated that increasing the penalty weeks will save the state $9 million a year. The same analysis estimated that the 15 percent penalty on restitution would generate $6 million a year.

Grove said the bill would redirect that $15 million into job training programs.

As a result, the penalties by unemployment cheats will be paying for improved service for those who are trying to land jobs.

“Benjamin Franklin said, ‘A small leak will sink a great ship,’ ” and Pennsylvania is attempting to fix all the small leaks in our unemployment compensation system so it can continue to provide a safety net for individuals who genuinely are eligible for benefits,” said Grove.

Lodico said that an unemployed person may collect benefits for months, only to have a former employer decide to dispute the claim. In those cases, the worker can be ordered to repay thousands of dollars. Grove’s bill would tack the 15 percent on top of that restitution, a penalty that is already difficult for jobless people.

Grove’s bill was co-sponsored by Rep. Fred Keller, R-Union County, and Rep. C. Adam Harris, R-Juniata County. The bill now heads to the Senate.

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