Computer system problems that delayed payment of thousands of unemployment benefit claims during the height of the COVID-19 pandemic were unavoidable and saved the state hundreds of millions in potentially fraudulent payments, Maryland’s secretary of labor told lawmakers Tuesday.
Tiffany Robinson defended her agency during a hearing on two legislative audits that found problems with both how the state paid claims and how it ensured businesses properly paid into the system. The outgoing secretary, speaking to members of the Joint Committee on Legislative Audits, told lawmakers the state had no choice but to fight fraudsters even as it mean significant delays in paying “honest claimants.”
Robinson said she “never suggested that everything we did was perfect” but said residents deserved “an honest and depoliticized bipartisan conversation about what really happened” and how to prevent it in the future.
The secretary’s comments Tuesday represented some of the most direct statements made publicly regarding difficulties with unemployment payments that left thousands waiting, sometimes for months, for benefits rightly owed to them.
“Looking back, would I have done some things differently? Of course,” said Robinson. “Did honest and deserving customers get caught up and delayed because of all the fraud? Yes, they did. And we continue to work every day to resolve those issues as they are presented to us.”
The secretary said she was under constant pressure from lawmakers on both sides of the aisle as well as from other elected officials to simply “pay everyone” and sort it out later.
“Without a doubt, the easier, politically convenient thing to do would have been to pay everyone, as many demanded of me,” she said. “But we chose another route and that was to help honest and deserving claimants quickly as was humanly possible while also fighting what really turned out to be the largest theft in American history.”
Even so, auditors labeled the results of the two reviews as unsatisfactory, triggering a follow-up review in the next six to 12 months, according to Greg Hook, the lead legislative auditor.
Robinson attributed a number of issues to the agency’s rollout of its modernized claims system, which went online in September 2020.
“I have no doubt that this was very difficult to implement, especially during the pandemic,” said Sen. Clarence Lam, D-Baltimore and Howard counties and co-chair of the committee. “I think that what the pandemic showed was really gaps in the system. We felt as legislators, oftentimes firsthand with our constituents calling us, from the view of many of our constituents, this could have been the Department of Labor’s finest hour. In some ways, to many of them, the department didn’t rise quite high enough to the occasion. For some of them, the service I think they expected didn’t meet their expectations. For others, it did. It’s been a mixed experience for a lot of folks.”
Lam said he and other lawmakers still field calls from constituents about problems with unemployment insurance payments.
“To say that we could have shined during a pandemic and that we did not, I would have to disagree with that,” said Robinson, who then compared the state’s new automated system to recent problems with a national promoter selling tickets for Taylor Swift concerts.
“We’re talking about a major, complex IT system,” said Robinson. “I would argue that even Ticketmaster didn’t handle a concert ticket launch very well in the past month. We are a state agency that was working under impossible circumstances and I’m really proud of our team.”
“Although for Ticketmaster, it wasn’t a matter of life or death for the most part,” said Lam. “But for a lot of our constituents this is really their ability to stay in their homes, keep their cars, to be able to support their families and so I think it’s important to have that right kind of frame, too.”
Robinson said the Maryland agency, as with other states, was the target of “a wave of sophisticated digital fraud” as the pandemic hit.
The state was already in the throes of a yearslong process of modernizing its unemployment system. The project, paid for by the federal government, had been delayed several times when the COVID-19 pandemic hit.
Suddenly, Maryland and other states found themselves dealing with unprecedented surges in unemployment claims as businesses closed their doors and laid off employees.
In fiscal 2019, the agency handled 135,000 claims. A year later, that number ballooned to 1.5 million. It grew again in fiscal 2022 to 1.9 million claims.
Robinson said the agency has flagged more than 1.5 million bogus claimants and a total of 2.5 million fraudulent claims to date. Some of those, she said in citing national reports, may be tied to fraudsters backed by China.
“In fact, we’ve received more fraudulent claims than honest and deserving claims,” she said.
“Let me be clear, if we had succumbed to the enormous political pressure to pay everyone, we would have lost tens of billions of dollars to very determined criminals,” said Robinson. “We now know we would have also been providing critical data to our nation’s most committed adversary.”
Lam pushed back on Robinson’s attempts to claim the state in some ways performed better than others.
“Fraud is not isolated to our state, obviously,” said Lam. “This is something that is taking place across all states in the nation that were experiencing similar rates of fraud across the board.”
Lam cited a review by The Pew Charitable Trust that found Maryland ranked only above North Dakota and Kentucky in terms of paying benefits within three weeks of a submitted claim.
“I can’t imagine that all the other 47 states ahead of us were not experiencing fraud concerns as well,” said Lam.
Robinson attributed the poor ranking to “honest reporting” of claims that were “backdated months and weeks” under federal guidelines.
“That immediately made the payment on that claim look like it was later than it actually was,” said Robinson, who also suggested some states may have reported claims in ways that made them appear to pay more quickly.