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Two Republican senators have launched an inquiry into improper unemployment insurance payments by New York, accusing the Empire State of lacking adequate anti-fraud measures.
Sens. Bill Cassidy (R-La.) and Tim Scott (R-SC), are also investigating potential unemployment fraud in California and Massachusetts — but New York, which may have lost up to $666 million in taxpayer money, is the biggest target.
“During the pandemic, New York’s comptroller reported that state leadership had been aware of issues with its unemployment insurance system since 2010,” Cassidy and Scott wrote in a letter to Democratic Gov. Kathy Hochul. “This preceded a threefold increase in fraud claims.”
“The most famous failure of New York’s unemployment insurance fraud prevention during that time is a former Congressman … was somehow able to claim $24,000 in unemployment insurance benefits while being employed,” they added, referring to lying former Long Island GOP Rep. George Santos.
The $666 million figure floated by the GOP lawmakers includes overpayments and underpayments.
Hochul’s team called the senators’ claims “patently false” and argued that the data they cite includes improper payments that were believed to be accurate based on data at the time they were made.
“The [New York State] Department of Labor takes fraud very seriously and has implemented several updates since the pandemic to fight fraud and abuse,” a spokesperson for the governor said.
“We continue to work with our law enforcement partners to pursue criminals and hold perpetrators accountable while ensuring workers receive the benefits to which they are entitled under law efficiently.”
The Office of State Comptroller Tom DiNapoli informed the DOL in June 2024 that the rate of unemployment insurance fraud in the Empire State was 7.38% as of March 31, 2023 — down from 17.59% for the 12 months ending March 31, 2022, but well above the pre-pandemic low of 4.51%.
Improper payments from California’s and Massachusetts’ unemployment insurance systems clocked in at roughly $482 million and $145 million, respectively, the senators said, citing data from the Department of Labor.
The two lawmakers gave the three blue states until June 24 to respond to a series of questions, including how unemployment insurance fraud is measured, details of strategies in place to mitigate abuse, and an explanation of how benefits are doled out in the first place.
“Unfortunately, fraudsters deceived states into distributing billions of dollars in benefits annually,” the senators wrote to Hochul, California Gov. Gavin Newsom and Massachusetts Gov. Maura Healey. “Lax controls on unemployment insurance systems do not lead to a faceless crime. American families suffer the consequences.”
“It allows criminals who are committing fraud to file claims, steal taxpayer dollars, and distract the state from hardworking Americans’ legitimate unemployment insurance claims,” they went on. “That money then ends up in the hands of overseas criminals instead of the people it is intended to help.”
Cassidy is the chairman of the Senate Committee on Health, Education, Labor and Pensions (HELP) and has launched several probes into New York over fraud concerns.
His panel, which launched a fraud task force earlier this year, has also scrutinized the potential abuse of federal child care funding and investigated student aid fraud.
Representatives for Newsom and Healey’s offices did not immediately respond to a requst for comment.
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