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More than $60 billion may have been paid out in fraudulent unemployment insurance during the Covid-19 pandemic, the U.S. Government Accountability Office said in a report released Monday.
The regulatory agency cautioned, however, that the estimate has limitations and should be interpreted with caution. Actual Pandemic Unemployment Benefit Fraud May Be “Extremely High”
At least $4.3 billion in unemployment benefits fraud is determined by state unemployment agencies, and at least $45 billion in payments have been detected by the U.S. Labor Department’s Office of Inspector General, the GAO said. But this cannot be interpreted as the extent of the problem, he continued.
The GAO report provides the latest insight into several schemes to steal money from various rapidly implemented pandemic relief programs.
It comes a week before newly elected House Republicans plan to launch their first investigation into fraud in pandemic aid efforts. The House Oversight Committee announced on February 1 that it will hold a hearing on the “Waste of Taxpayer Dollars on Covid Relief Programs.”
The committee, chaired by Rep. James Comer of Kentucky, sent letters to the Labor Department and the Office of Inspector General, as well as state labor departments in California, New York and Pennsylvania, asking for more information about fraudulent unemployment benefits.
“We owe it to the American people to recognize how hundreds of billions of taxpayer dollars have been lost to waste, fraud, abuse and mismanagement as a result of the pandemic,” Comer said.
The Labor Department said it had received Comer’s letter and was reviewing it.
In March 2020, fraud in the country increased after Congress enacted a historic expansion of the program to deal with the economic crisis caused by the Covid-19 pandemic. State unemployment agencies are overwhelmed with record claims and have relaxed some requirements. An effort to get the money out quickly for those who lost their jobs.
States and Congress have since strengthened their verification requirements to combat fraud, particularly through a new temporary program that allowed freelancers, gig workers and others to collect benefits for the first time.
The main component of the relief was the federal weekly supplement for out-of-work Americans. The unemployed received an increase of $600 per week from April to July 2020. Congress renewed the reform in late December 2020, dropping it to $300 a week. That extension expires in September 2021, although several states with a Republican governor and one with a Democratic governor have expired earlier.
Lawmakers also created two other major measures to help the unemployed. The Pandemic Unemployment Assistance Program provides payments to freelancers, self-employed workers, independent contractors, and certain people affected by the pandemic, while the Pandemic Emergency Unemployment Compensation Program extends payments to people who qualify for regular government benefits. Those programs ended in September 2021.
From April 2020 to September 2022, a total of nearly $878 billion was paid in pandemic unemployment benefits, the GAO said, citing Labor Department data.
The Labor Department has taken steps to address the risks of fraud, including providing guidance to states to provide funding and deploying teams to recommend improvements to state unemployment insurance programs, the GAO said. But the office described the move as “interesting.”
The department has yet to develop an anti-fraud strategy based on the GAO’s Fraud Risk Framework to address the office’s six recommendations in October 2021. These include identifying, assessing and prioritizing unemployment insurance fraud risks.
Last June, the GAO added the unemployment insurance system to its high risk list.
In response, the Labor Department is continuing to implement its recommendations through 2022. In addition, the GAO is working to reduce the risk of unemployment insurance fraud under the GAO Framework.
But the department has an unemployment insurance integrity strategic plan, and many of its strategies have identified fraud risks.
The GAO report’s estimate is higher than that released in September by the Labor Department’s Office of Inspector General. Between March 2020 and April 2022, $45.6 billion in pandemic unemployment benefits may have been fraudulently paid in four high-risk areas, he said.
The inspector general looked into payments linked to the Social Security numbers of people who filed lawsuits in several states, died, were federal inmates and used suspicious email accounts to claim their claims.
Also, the Office of the Inspector General announced that the Department of Labor Employment and Training Administration, which oversees the unemployment insurance program, did not implement the recommendations made by the office to thwart fraud in these areas in the past. In response, the department will continue to “vigilantly and proactively address fraud” in unemployment compensation programs.
In the year In its 2021 semiannual report to Congress, the inspector general’s office said at least $87 billion in unemployment benefits may have been improperly paid, with a significant portion fraudulent — based on historical improper payment rates of 10% or more. However, the office’s audit and investigation indicated that the amount of improper payment was ultimately more than 10 percent.
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