Labor Secretary questioned about Pennsylvania unemployment compensation system problems

PITTSBURGH — The Department of Labor and Industry was in the hot seat today, as a Channel 11 News investigation into unemployment compensation fraud prompted questions at a state budget hearing.

During the House Appropriations Committee budget hearing for the Department of Labor and Industry, frustrated lawmakers took Secretary of Labor Jennifer Berrier to task over the many problems surrounding the state unemployment compensation system.

One issue, in particular, was fraud uncovered by 11 Investigates.

“Do you recognize the name Pat McDermott?,” Rep. Tim O’Neal (Washington County) asked Secretary Berrier, referencing the fraud uncovered by 11 Investigates.

“I do not, sir,” Berrier responded.

“This has been reported since Dec. 31 in the news, specifically WPXI. So, let me ask you directly: Has there been a breach of data in the unemployment compensation system?”

Berrier said the Department of Labor and Industry could not technically say there is a breach, because they haven’t determined what, if any, data was stolen.

“We know there is fraudulent activity occurring within our system, but we haven’t been able to determine whether people have pulled data out of our system,” Berrier said.

Accounts Hacked

11 Investigates first told you in December about the hacking of an unemployment recipient named Ryan, who asked us not to use his last name. Ryan sent us screenshots showing that on Nov. 28 someone going by the name Pat McDermott changed his payment type from debit card to direct deposit in a Wells Fargo bank account that was not his.

After that report, dozens of people contacted 11 Investigates saying their accounts were also hacked in the same way. Many told us they didn’t realize their accounts were hacked until after seeing our story, and were especially upset because the state didn’t notify them their personal information was compromised.

“I wouldn’t have known what was going on with my account if it wasn’t for you,” unemployment recipient Pete Smock told us.

A new report by the Pennsylvania Independent Fiscal Office shows more than $6 billion in unemployment compensation money was stolen from Pennsylvania across all programs during the pandemic through last September. That’s nearly a 13% fraud rate.

The labor secretary was asked pointed questions about why claimants were not notified.

“There’s widespread fraud. The department knows about the fraud. Have you notified UC claimants about the fraud?,” asked Rep. Ryan Warner (Fayette County).

But Berrier would not provide a direct answer.

“So, sir, because of all the unemployment compensation fraud that has arisen over the past two years, we are experiencing many different forms of fraud, some of it we don’t know about.” Berrier said.

Warner interrupted her, leading to this exchange:

Warner: “Did you notify claimants about the fraud? That’s the question. It’s yes or no. It’s pretty simple.”

Berrier: “It’s actually not a simple question.”

Warner: “Yes, it is. You either notified them or you didn’t.”

Berrier: “You’re kind of convoluting the question. It’s actually a lot more complex than you’re stating.”

Warner told the secretary he believes the department should notify claimants about the fraud.

“There’s been no correspondence with your department that these people face potential fraud. That, ‘Hey, you might want to look at your account because you could have been hacked or experiencing a major, major problem,’” Warner said.

After several stories and repeated questions from 11 Investigates about a potential breach, the state did announce in January that it would offer free credit monitoring to all unemployment recipients due to the fraud exposed. But it’s been more than a month since that announcement and the credit monitoring still hasn’t been provided.

O’Neal wanted to know what is causing the delay for the free credit monitoring and other additional security measures yet to be implemented.

“What’s taking so long?” O’Neal asked.

“These things take time, sir,”  Berrier replied.

“Oh, these things take time,” O’Neal said, repeating Berrier’s comment. “People’s personal information being compromised. It takes time to fix. I’m sorry, Madame Secretary, I appreciate the position you’re in. It’s not easy, but to simply say — be flippant about a response and say — ‘these things take time’ is an unacceptable answer when we’re talking about personal info of thousands of people across the Commonwealth.”

In response to the questioning, the secretary did reveal that letters for free credit monitoring will go out to some 900,000 unemployment compensation recipients next week.

Berrier also said, as an added layer of security, just this past Sunday the department finally implemented the additional security measure of multifactor authentication to log into the Pennsylvania unemployment compensation system, something cybersecurity experts have said should have been done long ago.

Several other issues were also discussed during the hearing, including lengthy delays for many unemployment recipients to get benefits and difficulty getting through to customer service to fix issues.

“This is not a government that works. This is abysmal and a stain on this government,” Rep. Natalie Mihalek (Allegheny County) said.

Report: $570 million in PA unemployment benefits stolen

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