Welcome to the July 28, 2005, issue of BullsEye, the On Point Technology newsletter. Our goal is to keep you up-to-date on the latest unemployment insurance news and developments at On Point Technology.

In this issue:

• Washington State goes live with Aware
• On Point Technology to exhibit at 2005 Biennial National UI Tax Conference
• New Aware-UI Tax Module to debut at next week's Biennial National UI Tax Conference
• Industry News: U.S. House approves funding to detect and prevent UI fraud
• Did You Know? InfoBase powers Aware's advanced query capabilities

Washington State goes live with Aware

On July 21, the Washington State Employment Security Department (WSESD) went live with On Point Technology’s Aware product, making it the first state to implement the unemployment insurance (UI) benefits application. WSESD has already loaded 28 files into the system, including such diverse records as benefit payment history, appeals, claimant profile, employer data and wage detail. An original cadre of 20 users has been trained, but the number of users will likely increase as the agency becomes more familiar with Aware and identifies additional staff whose functions could be enhanced with access to the application.

The On Point Technology installation team credits Kathy Moore and the Office of Special Investigations, and Brian Kerr and Yousef Fahoum from the Department’s
Network Services Unit for their efforts in contributing to a successful implementation.

On Point Technology to exhibit at 2005 Biennial National UI Tax Conference

On Point Technology will travel to Boise, Idaho, next week for the 2005 Biennial National UI Tax Conference, where representatives will unveil the recently developed Aware-UI Tax Module and discuss the InfoBase technology that underpins all Aware modules. The conference, which runs August 2-5, focuses on unemployment insurance (UI) tax issues and is attended by UI program administrators from around the country.

This year's event will feature a variety of panel discussions addressing UI tax issues, such as recently developed quality measures and new technology systems. Much discussion will also be devoted to best practices in UI tax, including new auditing methods being used to identify tax avoidance schemes and innovative approaches to the UI collections process. The conference will also serve as the training ground for implementing federal SUTA dumping legislation, and some panel discussions are slated to explore the current status of SUTA dumping laws, the recently released SUTA Dumping Detection System and pilot states' experiences with it, and SUTA dumping investigative techniques.

On Point Technology representatives Bob Yokavonus and Hit Mistry will conduct software demos at the company's booth, and will also be available for more in-depth demonstrations upon participant request.

New Aware-UI Tax Module to debut at next week's Biennial National UI Tax Conference

At the upcoming Biennial National UI Tax Conference, On Point Technology will debut its new Aware-UI Tax Module, a version of its Aware software that enables state workforce agency staff to identify instances of employers underpaying or not filing unemployment insurance (UI) taxes.

In the UI program, benefit payments are financed through the collection of taxes from employers. While no one likes to pay taxes, everyone is expected to do their fair share, and most employers abide by the rules and regulations. However, as is the case in so many business dealings, some employers will inevitably try to beat the system.

Historically, state workforce agencies have relied on desk and on-site audits to secure the proper payment of taxes, but these audits are limited by the number and types of staff available, and involve a very labor-intensive approach. Targeting industries with a track record for non-filing and underpaying has helped to optimize the impact of auditing, but is only a partial solution. Very often the audit doesn't occur until a claim for benefits is filed against an employer who hasn't registered or paid taxes. A study conducted by the General Accounting Office in June 2003 reported that many state UI administrators "cited poor detection methods and inadequate funding for investigation and enforcement efforts as obstacles to addressing these [non-filing and underpaying] practices." In recent months, several states have attempted to improve compliance efforts by increasing penalties, but the results are yet to be seen.

While SUTA dumping schemes—which allow employers to illegally avoid taxes by shifting employees from high tax rate installations to lower ones—have recently garnered significant attention, other tax avoidance schemes are likely to account for a greater loss of UI tax revenues. These approaches include:

• failing to register as an employer,
• incorrectly reporting wages (under reporting),
• misclassifying employees as "independent contractors,"
• failing to provide required information,
• moving employees to professional employment organizations and leasing them back,
• inhibiting inspection by state workforce agency auditors, and
• paying employees "off the books."

On Point Technology's new Aware-UI Tax Module enables state workforce agencies to identify instances of employers underpaying or not filing UI taxes. The module consists of 24 one-click audits, which were created with input from several state UI tax auditors. The audits focus on specific patterns that would isolate situations appearing to suggest that the employer has either failed to register with the state or is under-reporting employment and wages. On Point Technology anticipates that this list will be refined and expanded as the Aware module is deployed and used by state workforce staff who are assigned the responsibility of identifying UI tax defrauders.

To learn more about Aware's new UI Tax module and the 24 one-click audits included, contact Bob Yokavonus at 908-526-0426 or robert.yokavonus@onpointtech.com.

Industry News

U.S. House approves funding to detect and prevent UI fraud — On June 23, the U.S. House of Representatives approved the annual appropriations bill (HR3010) to fund programs administered by the U.S. Departments of Labor, Health and Human Services, and Education. This bill provides $30 million to prevent and detect fraudulent unemployment insurance benefits claims filed using personal identification information stolen from workers. It also requires that the Secretary of Labor provide a report to Congress no later than 180 days after the end of FY2006 that details the following:

• The estimated number of benefits claims filed using stolen identification that are found and stopped at the time of initial claim filing, along with an estimate of the resulting savings.
• The estimated number of identity theft-based continued claims stopped, with an estimate of the amount paid on these fraudulent claims and the estimated savings resulting from their termination.

The bill has been referred to the Senate Committee on Appropriations. You can find the entire bill online by visiting
http://thomas.loc.gov and searching for bill number HR3010.

On Point Technology's software products are designed to detect both individual and organized fraud schemes. If you would like more information on how Barts and/or Aware can improve fraud detection for your organization, contact Bob Yokavonus at 908-526-0426 or e-mail him at robert.yokavonus@onpointtech.com.

Do you have a fraud story you'd like to share?
Let us know.

Did You Know?

Suppose you're an unemployment insurance (UI) fraud investigator and are dealing with some suspicious-looking claims data. It doesn't pass the "smell test"—you're not quite sure why, but your training and sixth sense tell you something's wrong. However, your experience tells you that analyzing the data without knowing exactly what approach to take will be time-consuming and costly, and will happen when your IT staff can work it into their long list of other priorities. And even then, it will be just a one-time result.

Did you know that with the InfoBase technology that powers On Point Technology's Aware software, you can immediately pursue your innate feeling about the suspicious data yourself? You can begin your analysis by breaking down the data by social security number—separating it into valid and non-valid files. From there, you can take the file of non-valid SSNs and dig into it from a number of different angles, looking at such diverse characteristics as the claimant address, reported telephone number, the 800 phone number from which a claim as filed, the IP address used to file an Internet claim, birth date and reported educational level. You can also create sub files along the way, refining the data by excluding some files and retaining others, and you have the ability to keep track of the data path you took for future reference and possible reuse. Aware also gives you the added benefit of being able to quickly add—with no reprogramming—additional data files as they become available.

To learn more about Aware's advanced query and interrogation capabilities, or to schedule an Aware demonstration at your office, contact Bob Yokavonus at 908-526-0426 or robert.yokavonus@onpointtech.com.

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