Estimated $700M fraudulent unemployment claims paid, $2B prevented


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TOPEKA (KSNT) – Auditors looking at Kansas Department of Labor unemployment claims believe there was 700M fraudulent claims from January 2020 to February 2021. It was estimated by the auditors that $2B worth of fraud was stopped.

Kansas paid about $2.8 billion in unemployment benefits from Jan. 2020 to February 2021; of that total LPA estimates about $700 million or about 25% may have been fraud.

Exactly how many fraudulent unemployment claims were filled is still trying to be determined. The state’s labor department said it’s standing by the claim that state auditors released “flawed” estimates of the amount paid out in fraudulent claims in 2020.

“LPA’s estimate of $600 million in potential fraud is seriously flawed, and should be withdrawn,” The Kansas Department of Labor said earlier this year.

The state’s labor department released a report estimating $290 million in fraud payments.

State auditors estimate that of the $600 million in fraud payments, $200 million was lost in state funds and $400 million were lost in federal funds.

Unhappy with the conclusion of the audit Kansas Governor Laura Kelly requested an additional audit.

The LPA is now releasing part 2 of their audit which officials hope will give a “more precise” number of fraudulent claims paid out.

Auditor Matt Etzal told the committee that the code that operated the KDOL system dated back to the 1970s. He cited three main causes for the delays, rapid changes happening during the pandemic, historically high unemployment claims, and an old computer system that was under a significant amount of strain on the mainframe.

The results of that strain led KDOL to believe those eligible for benefits were mistakingly told they were not eligible.

KDOL only had 33 trained individuals to answer calls for unemployment claims. Despite the addition of additional staff, Etzal told the committee more calls were not answered.

From January 2020 to February 2021 auditors believe there may be 700M in fraud. Etzal told the committee that 343M came from federal funds and 344M were state funds.

Claims increased from 3,000 in Feb. to 6,000 in March, causing the system to break down periodically. 

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