State Government

Cyber-insurance covers est. $7 mil loss from State’s 1099 goof

A cyber-insurance policy taken out by the State of Vermont in 2019 will save almost $7 million in projected losses from the inadvertent disclosure of many 1099-G forms last month, the Scott administration announced today. Thanks to the policy, the State of Vermont will owe only the $250,000 deductible, rather than an expected $7 million expense.

Department of Labor Commissioner Michael Harrington

That’s the good news for Vermont taxpayers not affected by the disclosure. For those who were, the State is offering – free of charge – a suite of identity protection services.

The cyber-snafu – the second since April involving the dilapidated Department of Labor computer – underscores the need for an overhaul of the State’s extensive IT system. In his budget address, Gov. Scott recommended spending significant sums of one-time federal money on a statewide upgrade. If approved, it will proceed under the care of Chief Information Officer John Quinn.

The State of Vermont will provide a suite of identity protection services to all unemployment insurance claimants who will receive a 2020 1099-G from the Vermont Department of Labor (VDOL). This service is being provided in response to the inadvertent disclosure that occurred on January 29 when VDOL mailed incorrect 1099-G forms to some unemployment claimants.

“I know this does not make up for the concerns this incident has caused, but I do hope it provides some reassurance that your identity can be protected and monitored, and in worst case scenarios, expenses will be covered to restore incurred losses,” Gov. Phil Scott said.

While not all unemployment insurance claimants were impacted by the unintentional disclosure, these services will be offered to the more than 100,000 2020 unemployment beneficiaries, out of an abundance of caution.

Identity Theft Guard Solutions, Inc. (IDX) Protection Packages Include:

  • Single Bureau Credit Monitoring
  • CyberScan Identity Monitoring
  • Identity Theft Insurance
  • Fully Managed Identity Recovery Services
  • Call Center and Informational Member Website

Next week claimants will receive direct notification containing details and instructions from IDX, the State’s contracted vendor. As soon as claimants sign up, protections will be retroactive to January 29, the date of the incident. The protection will last for a minimum of 12 months from the date of the incident.

Fortunately, the Scott Administration purchased a cyber security insurance policy in May of 2019 to protect the identities of Vermonters affected by these incidents. Initial estimates were thought to be up to $7 million, but thankfully this insurance policy, and more affordable pricing from the vendor, resulted in the State covering just the $250,000 deductible.

In addition to the services provided through IDX, claimants are also encouraged to contact the three major credit bureaus to place a security freeze on their credit. This can be done online or by calling the numbers listed below:

As a reminder, the Department of Labor is issuing recapture envelopes this week. Claimants should expect to see a VDOL envelope with instructions and a return envelope to mail back the 1099-G document they were mailed VDOL, even if it is believed to have accurate information. The Department is verifying and validating claimant information to reissue accurate VDOL 1099-G forms to all 2020 unemployment insurance claimants.

“I would again like to extend my sincerest apology to those who are impacted by this incident and reinforce that the Department of Labor remains committed to ensuring its processes are of the highest quality and that the information we are entrusted with is safe and secure,” said Commissioner of Labor Michael Harrington. “With that in mind, we will continue to review and improve our procedures as we work to regain the public’s trust.”

(This report combines Vermont Daily reporting with a press release issued today by the Scott administration.)

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