‘Organized criminal elements’ are filing fake disability claims, California officials say
State officials Tuesday said they were quickly acting to stop a recent move they described as “a recent move by organized criminal elements to file false disability insurance claims.”
The scheme involved suspected organized criminal elements “filing false disability insurance claims by attempting to use stolen credentials of individuals and medical or health providers,” according to a statement by the state’s Employment Development Department.
EDD cited no estimated dollar losses.
“Our investigators are actively evaluating suspected scam-related claims and activities. No losses have been confirmed at this time,” the agency said on its Help Fight Fraud website.
Because it is taking additional steps to protect legitimate medical and health care providers and claimants, there could be some delays in the system.
“The filters will slow the process of registering new providers and may impact the time it takes for legitimate claimants to receive benefits,” the EDD statement said.
Among the new safeguards: EDD has suspended payments on certain claims until it can further verify information on that claim.
The agency is also boosting its medical and health provider vetting process and halting payment on many new claims.
EDD has been grappling with other fraud involving the unemployment program that it manages. An estimated $20 billion has been paid in fraudulent claims, and organized crime is suspected to be behind much of the activity that targeted the vulnerabilities in the federally-funded Pandemic Unemployment Assistance program..
How disability claims work
Disability insurance benefits provide partial wage replacement for eligible workers who cannot work and have lost pay because of illness, injury, or pregnancy.
Medical and health providers certify a disability that an applicant reports when seeking disability insurance benefits from EDD.
The agency found that evidence of the fraud scheme included a recent increase in new online medical or health provider account EDD registrations and an increase in disability insurance claims.
“The department saw a recent rise in new online medical and health provider account registrations and strongly suspects most of those registrations were fraudulent,” said Ronald Washington, EDD’s Disability Insurance Deputy Director, in a statement.
EDD has found no evidence that California medical or health providers were knowingly involved in the scam.
“Fraudsters use identities likely stolen during previous data breaches involving institutions like banks, insurance companies, and major employers,” EDD says on its Help Fight Fraud webpage.
“Such stolen information circulates in many illicit channels. Scammers use the stolen information to file fraudulent claims and illegally collect benefits in the name of identity-theft victims,” it explains.
EDD advised anyone who gets communications from the agency and suspects fraudulent activity, such as someone filing a claim or creating an account, to file a fraud report. Such letters are a part of EDD fraud prevention methods now in place.
Filing a fraud report is best done online by visiting Ask EDD and selecting the “Report Fraud” category to complete the Fraud Reporting Form.
Anyone victimized by these schemes can also file an identity theft report with the Federal Trade Commission (FTC).
This story was originally published December 14, 2021 at 6:22 PM.
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