Much of the debate surrounding a plan to introduce harsher penalties for defrauding the state's unemployment system has centered on the distinction between people who commit intentional fraud, and people who get more benefits than they should due to honest mistakes.
State Rep. Samantha Kerkman is the author of the "Two Strikes and You're Out" bill, a measure that would bar people from getting unemployment benefits for seven years if they are twice found guilty of defrauding the system. She says that addressing intentional fraud is critical because it means protecting people who actually need the benefits.
Democratic opponents of the bill say the state's focus needs to be on "unintentional fraud" — cases of people making errors on their unemployment claims due to confusing questions, resulting in overpayments. They say that Kerkman's bill not only fails to address that problem, but could end up punishing people who have simply made honest mistakes.
The Legislative Audit Bureau published a report last year on the state's unemployment insurance system that sheds light on the distinction. It found that in 85 percent of instances where the state gave an individual too much money, the overpayment was because a claimant had made a mistake during the application process. In 9.5 percent of the cases, the overpayment was due to intentional fraud.
The LAB report found that more money was lost due to the intentional fraud — about $86 million, as opposed to $62 million in overpayments made as a result of unintentional error.
Kerkman said Monday that she's all for simplifying the claims-filing system — however, her primary concern remains addressing intentional fraud. She cited the case of a Milwaukee nurse who was found guilty of collecting $40,000 in benefits annually, even though she had a job in which she made $70,000 a year. Kerkman said cases like that make her "frustrated" and "angry."
She added that her motivation for the bill wasn't vindictive.
"I'm doing this bill to make programs stronger for those who really need the benefits … not for people who are frauding out the system, creating schemes to collect more money," she said.
That said, she acknowledged that the seven-year penalty proposal was a compromise for her: She would have prefered a lifetime ban.
A seven-year ban in and of itself would mark a major shift in how the state prosecutes unemployment fraud. Currently, when the Department of Workforce Development determines that someone has committed fraud, that person becomes ineligible to receive benefits for a shorter period of time, and can also face additional fines.
One Democratic opponent of the legislation, Rep. Andy Jorgensen, said that Kerkman and other proponents of the seven-year ban have misplaced priorities. He said that before tackling fraud, the state needs to fix the insurance application process by removing questions that are needlessly confusing.
"It's a problem of the system, not the people — and that's the problem that needs to be addressed first," he said.
He said that the complex nature of the application process is dangerous not just because it results in the state losing money. He said it can also punish people for making a simple mistake. He pointed to public testimony on the bill from last week, in which a legal representative talked about a client with Asperger's syndrome who is on the hook for thousands of dollars in fines after making an error in his unemployment claim.
Jorgensen said that under Kerkman's bill, the state will continue to muddy the distinction between actual fraud and honest mistakes.
"Under this bill, you could be accused of fraud when all you were was just really confused," he said. "That's a shame."
Kerkman's proposal is one of two bills addressing public benefits fraud that Republican lawmakers in the state Assembly are considering this summer. The other bill, which has also been the subject of much scrutiny, would require FoodShare users to have a photo ID when buying groceries.