In mid-December, the California Employment Development Department (EDD), which oversees unemployment and disability claims for the Golden State, announced that it was beginning an investigation into mass false disability insurance claims being filed by what is thought to be “organized criminal elements.” While the investigation is ongoing, the EDD has now suspended payment on about 345,000 disability claims as of January 14, 2022. The investigation is certainly necessary in order to identify the perpetrators behind the massive fraud, but many on the west coast worry that the freeze will have detrimental effects on thousands of real disabled people in need of benefits.
Fraud causing a fracas
In recent years, the EDD has experienced a surge in fraudulent activity coinciding with increased unemployment claims associated with COVID-19, all to the tune of an estimated $20 billion in losses due to fraud. And now it seems that fraud has made its way to the world of disability claims as well. EDD officials suspect that organized crime networks are behind a massive disability fraud scheme connected to 27,000 “suspicious medical provider registrants.” More specifically, the EDD believes that an organized group of fraudsters are attempting to impersonate doctors or other health professionals in an attempt to substantiate individual fraudulent disability insurance claims. Impersonating medical professionals in this way would involve using stolen credentials from legitimate medical and healthcare providers and passing them off as their own. The EDD also suspects that scammers are sending phishing emails from phony accounts using the “@edd.ca.gov” suffix in an attempt to trick medical professionals into clicking fake log-in links where they would then inadvertently share their log-in info with the fraudsters.
Freezing more than fraud
As a part of the investigation into the 27,000 possibly fraudulent medical provider registrants, the EDD has frozen benefits payments on the 345,000 disability claims associated with those medical providers. The meat of the investigation is a new verification process for each medical provider to reestablish legitimacy, and while that verification process takes place, real people with disabilities who are decidedly not committing fraud are being forced to live without their disability benefits.
Yet the EDD has failed to explicitly address the damage that the blanket freeze will have on people with real disabilities. With the EDD seemingly oblivious to the issue, the Fresno Bee reports that some watching the investigation including Assembly Member Jim Patterson (R-Fresno) feel that the “EDD is bungling its response to the issue, and it’s hurting people with legitimate needs.” The Assembly Member went on to question the agency’s verification process by pointing out that it should be a straightforward process for the EDD to identify legitimate claims because they have records for some individuals going back years pre-dating the fraud, and processing claims for these individuals “is not anything new.”
The most the EDD has said about the likelihood that they’ve frozen legitimate accounts and withheld funds from disabled people is that it’s a “top priority” to join state regulators and medical provider organizations in efforts to complete the verification processes so that any legitimate claims can be cleared. But how quickly those claims will be cleared was not clarified by any of the recent press releases from the agency.
While the EDD seems to have no sense of urgency in completing the verification process, the agency has stated that the new process involves medical providers verifying their identity using ID.me, the standard for such verification in most states. And the EDD has advised medical professionals to vet any communication they receive from an @edd.ca.gov email suffix, ensuring the legitimacy of the sender before following any verification instructions contained therein.
Additionally, the EDD has advised that anyone who suspects that their identity, credentials, or log-in info may have been stolen for fraudulent purposes should file a report with the agency online at askedd.edd.ca.gov.
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