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Gov’t Report Sparks New Calls for Investigation into COVID UI Fraud

Posted by Ann Fitz | Jan 25, 2023 | 0 Comments

A new government report released Monday by the U.S. Government Accountability Office (GAO) verified that COVID-related unemployment insurance (UI) fraud topped at least $4.3 billion for the period from March 2020 to March 2022.  However, this amount does not account for potential UI fraud that has not been formally determined as such.  According to the Department of Labor, at least $45.6 billion in UI payments are potentially fraudulent.

In the wake of the COVID pandemic and shutdowns in March 2020, Congress enacted new federally funded unemployment insurance programs that expanded eligibility, enhanced benefits and extended the duration for which benefits would be available. Within 5 months, more than 57 million people filed initial claims with the UI program.  Approximately $878 billion was paid out under the program as of September 2022.

The unemployment payments gave people resources to pay for food, rent and utilities, the GAO report noted.  But it also led to a situation where state unemployment agencies were swamped with claims and failed to independently verify that the claims provided accurate information.  In some cases, fraudulent UI benefits were paid to individuals with Social Security numbers: (1) filed in multiple states, (2) of deceased persons, (3) filed with suspicious email accounts, and (4) of federal prisoners.  There were also efforts by organized criminal groups to use stolen identities to try to collect benefits.

According to the DOL, the infusion of hundreds of billions in federal funds into the UI program gave individuals and organized criminal groups a high-value target to exploit. That, combined with easily attainable stolen personally identifiable information and continuing UI program weaknesses, allowed criminals to defraud the system.

In its report, the GAO notes that the DOL has taken steps to address UI fraud risks. For example, the DOL issued guidance, provided funding to states, and deployed teams to recommend improvements to state UI programs. While these steps help prevent, detect, and respond to fraud, the report states that as of December 2022, the DOL has not yet developed an antifraud strategy based on leading practices in GAO's Fraud Risk Framework. Also, it has not yet addressed the six October 2021 recommendations GAO made including to identify, assess the impact of, and prioritize UI fraud risks.

The GAO warns that without an antifraud strategy, the DOL is not able to ensure that it is addressing the most significant fraud risks facing the UI system.

The new Republican Chairman of the House Ways and Means Committee, Jason Smith (R-MO), is calling for a long overdue investigation into COVID-related UI fraud in response to the report:

“This report proves what Republicans have already been saying. American families, whose wages have eroded under President Biden's inflation crisis, have watched as hundreds of billions of their hard-earned tax dollars were lost to criminal activity and fraud because Democrats refused to acknowledge the problem and repeatedly rejected Republican efforts to put basic safeguards in place to protect against this activity.

“Congressional Democrats walked away from their oversight responsibilities of getting to the bottom of how this happened, what they could do to prevent it, and even how much has fully been lost, leaving criminals to profit off the backs of taxpayers. Republicans are committed to investigating fraud and conducting rigorous oversight on behalf of working families.”

About the Author

Ann Fitz

Attorney Ann Fitz Attorney Ann Fitz has 20 years of experience as a federal criminal attorney and appellate practice attorney.  She began her career as a prosecutor in 2003 and started her own federal criminal defense practice in 2007.  She is devoted to protecting the rights of the accused in f...

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