Sneak Preview: Labor OIG Issues UI Program Fraud Alert Memo
(The following was excerpted from a recent Thompson Grants 360 article.) The Department of Labor (DOL) Office of Inspector General (OIG) recently issued an alert to a key official with the agency’s Employment and Training Administration (ETA) urging the agency to take “immediate action” to ensure that state workforce agencies (SWAs) implement effective controls to mitigate Unemployment Insurance (UI) program fraud and improper payments.
OIG noted that during its review period, it identified more than $5.4 billion in potential fraudulent UI benefits paid to multi-state claimants (i.e., beneficiaries making UI claims in more than one state); to Social Security numbers of deceased persons and federal inmates; and to individuals who filed for UI claims with suspicious email accounts. These payments cover the period from March 2020 through October 2020, and include payments made to the UI program expansion under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136). Because this total comes from only a subset of data OIG reviewed, it contended that “the actual amount of potential fraud is much larger.”
OIG explained that certain states have reported paying billions of dollars in fraudulent UI benefit claims. California, for example, reported that it paid at least $11 billion in fraudulent claims since the pandemic began (adding that this amount could be as high as $29 billion), while New York has recorded $1 billion, Washington recognized $600 million and Maryland reported $501 million in fraudulent UI claims. “If other SWAs have problems similar to California, the potential fraud occurring throughout the nation could easily range into the tens of billions of dollars,” OIG explained.
The CARES Act allows a claimant who works in more than one state to only file for UI benefits in one state. When assessing multi-state claimants who received UI benefits from March 2020 to October 2020, OIG found that individuals used a total of 225,829 Social Security numbers in two or more states to receive benefits of more than $3.5 billion. For example, one claimant used a Social Security number to file a claim in 40 states and received $222,532 in benefits from 29 states.
OIG explained that these errors were caused by SWAs that did not effectively identify potentially fraudulent claims. For example, one SWA processed UI claims without running them through a fraud-screening program, and therefore paid more than $191 million in potentially ineligible multi-state claims. “All SWAs have the ability to perform cross matches as a tool to mitigate fraudulent activity,” OIG added. “However, SWA efforts will not be fully effective unless all 54 SWAs consistently and effectively perform multi-state cross-matches.”
(The full version of this story has now been made available to all for a limited time here.)
Join us for our following Thompson Grants events:
Subaward Compliance Management: How to Effectively Monitor Subrecipients | March 25, 2021
Virtual Federal Grants Forum: For State & Local Governments | May 11 - 12, 2021
