California freezes hundreds of thousands of suspicious disability insurance claims

California’s labor department froze 345,000 disability insurance claims the state suspects are connected to fraudulent actors looking to exploit the system.

The state’s Employment Development Department (EDD) said in a news release on Jan. 13 that it suspected “organized criminal elements” of filing false claims using stolen credentials from doctors or other medical professionals. The department froze 27,000 suspicious medical provider registrants and 345,000 claims associated with those providers or other suspicious activity.

The EDD is asking medical providers to complete identification forms to confirm identities as the state works to unfreeze accounts that are authentic.

“While the majority of these providers and claims were likely fraud attempts, the Department has partnered with state regulators and medical provider organizations to coordinate the verification process to clear any legitimate claims as quickly as possible,” the press release read. “This is EDD’s top priority.”

The pandemic revealed that many states were vulnerable to fraudulent claims for insurance benefits issued by the state and federal government to assist people affected by the novel coronavirus. California has lost $20 billion to fraudulent claims, according to the Los Angeles Times.

California is still in the process of unfreezing 1.4 million Pandemic Unemployment Assistance claims it suspended in light of fraud concerns. One in five of residents have refiled claims for PUA so far, and 90 percent of those claims have been cleared by the state, according to the Jan. 13 update.

Disability insurance assists Americans who struggle with a disability. Until the suspended claims are reprocessed, some people who rely on those benefits say they will struggle.

Theresa Holt told Fox KTVU she was “angry” after she had recent medical issues and could not access her disability insurance.

“I’m stuck in this loophole that they’ve created. I feel it’s unacceptable,” she said.

But the sheer number of fraudulent claims and the amount of stolen dollars in California has some questioning how fraud has become so easy.

Sen. Richard Pan, a pediatrician who represents Sacramento for the state congress, told the Los Angeles Times that people can easily look up identities online.

“I think it speaks to the issue of privacy on the internet and the opportunity it gives people who want to scam and try to take over other people’s identity,” he said.