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Committee on Ways and Means
Subcommittee on Human Resources

For Immediate Release
Contact: Press Office 202-225-8933
July 9, 2002

WASHINGTON - To reduce fraud and abuse in America’s unemployment compensation program, the Chairman of the U.S. House Ways and Means Human Resources Subcommittee, Wally Herger (R-CA), sent a letter to all 50 governors highlighting billions of dollars in program fraud recently uncovered and urging them to work with Congress and the Department of Labor to solve the problem.

During a Human Resources Subcommittee hearing on June 11, 2002, the General Accounting Office (GAO) reported that the Nation’s unemployment benefits system had lost an estimated $18 billion to waste, fraud and abuse in the last 10 years. Among other problems, the GAO cited:

• “Over the past 10 years…overpayments averaged about $1.8 billion per year and reached a high of $2.4 billion in 2001.”
• “Labor and the States do not always take the necessary steps to adequately verify claimants’ initial and continuing eligibility for benefits.”
• “The results of our work suggest that, in this environment, overpayments are not likely to abate and could increase.”

Earlier this year States received tremendous new resources they can use to recover past overpayments and prevent future fraud and abuse. Under the Job Creation and Worker Assistance Act of 2002 (P.L. 107-147), signed into law by President Bush on March 9, 2002, each State received a share of $8 billion in surplus Federal unemployment funds it could use to combat fraud and abuse, among other purposes. Herger urged the Governors to use some of these resources to better ensure program integrity.

“Immediate action is critical…I pledge to work with you and the Department of Labor to thoughtfully review these issues and develop practical solutions,” Herger told the Governors.