Confirms Ways and Means GOP Approach to Combating Fraud and Identity Theft
WASHINGTON – State workforce agencies were hamstrung in their ability to prevent fraud in the Pandemic Unemployment Assistance (PUA) program because applicants were allowed to “self-certify” their work history and eligibility, according to a new watchdog report.
The Government Accountability Office (GAO) reviewed internal controls used by states to manage fraud risks in the PUA program and found that “self-certification and the use of automatic backdating in processing claims heightened PUA program risks.” Interviews with state auditors found that the PUA eligibility requirements decreased internal controls usually relied upon by state workforce agencies to prevent fraud.
According to the Department of Labor and White House, the PUA program had outlays of nearly $132 billion over less than two years and an estimated improper payment rate of 36.9 percent, almost half of program spending. GAO’s reportsaid:
“In an example illustrating the risk of relying on self-certification, we identified an instance in our review of a sample of PUA payments from selected states where the applicant self-certified that they had to stop their lawn service business in early February 2020 due to COVID-19. However, at that time in the applicants’ state, there were no reported cases of COVID-19, nor were there any restrictions in place that would impact the business. From our review of the claim, we identified no actions taken by the state to verify the applicant’s self-certification across the 28 weeks the claim was paid, resulting in more than $4,000 in PUA benefits being paid out.” (GAO-24-107471)
In response to alerts by law enforcement agencies of rampant fraud in pandemic unemployment insurance (UI) programs, Ways and Means Republicans successfully fought to change PUA in December 2020 to stop self-certification and require applicants to provide documentation of prior earnings and identity, helping to prevent even more fraud from occurring. In April 2021, Democrats rejected additional efforts to strengthen program integrity measures Republicans offered while simultaneously extending supplemental UI benefits that paid people more not to work in the American Rescue Plan Act.
“A program intended to help Americans get through a once-in-a-lifetime pandemic was abused by fraudsters, prisoners, and international criminal rings, leaving taxpayers on the hook for tens of billions of dollars,” said Ways and Means Committee Chairman Jason Smith (MO-08). “Ways and Means Republicans understand that verifying the identity of applicants – something state workforce agencies have done for years – is a no-brainer, and GAO agrees. Congress should pass the Protecting Taxpayers and Victims of Unemployment Fraud Act to ensure such fraud never happens again.”
The Details:
- GAO’s new report focuses on one of the four federal unemployment insurance (UI) programs created during the COVID-19 pandemic – the Pandemic Unemployment Assistance or PUA program. In September 2023, GAO estimated that UI programs during the pandemic—including the PUA program—were subject to an estimated $100 billion to $135 billion in fraud from April 2020 through May 2023. .
- PUA was created to provide supplemental unemployment benefits to workers not traditionally covered by regular state unemployment programs, such as gig workers and the self-employed. According to the Labor Department Inspector General, self-certification was the leading cause of fraud in the PUA program.
- In December 2020, Congress passed the bipartisan Consolidated Appropriations Act, which included a provision that Ways and Means Republicans fought for, requiring documentation of prior earnings and identity verification for all PUA applicants.
- The GAO report confirms the importance of data matching and identity verification controls by state workforce agencies who administer UI benefits.
- Many of these provisions are included in the House-passed bipartisan Protecting Taxpayers and Victims of Unemployment Fraud Act (H.R. 1163).