Oversight Committee Releases Report on Rampant Waste, Fraud, and Abuse in Pandemic Unemployment Relief Programs

Press ReleasePublished: Sep 10, 2024

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Provides recommendations to protect taxpayers and prevent fraud in unemployment insurance programs in the future

WASHINGTON-Today, House Committee on Oversight and Accountability Chairman James Comer (R-Ky.) and Government Operations and the Federal Workforce Subcommittee Chairman Pete Sessions (R-Texas) released a staff report titled "Widespread Failures and Fraud in Pandemic Unemployment Relief Programs." The report details information, documents, and communications obtained by the Committee showing how states across the country, including California, New York, and Pennsylvania, processed and administered pandemic unemployment insurance (UI) claims with minimal oversight, resulting in billions of taxpayer dollars lost to improper and fraudulent payments that will likely never be recovered. In addition, the report includes a list of recommendations to prevent improper payments and fraud in unemployment insurance programs in the future.

"Democrats and the Biden-Harris Administration spent trillions of dollars under the guise of pandemic relief and the Oversight Committee's very first hearing this Congress exposed how this unchecked spending left taxpayer funds, including UI programs, vulnerable to significant waste, fraud, and abuse. While Democrats turned a blind eye to this waste of taxpayer dollars, Republicans were committed to identifying how these taxpayer funds fell prey to fraudsters and criminal organizations. Today's report includes a list of comprehensive recommendations to ensure future taxpayer-funded UI programs don't suffer a similar fate. Rooting out waste, fraud, abuse, and mismanagement in the federal government remains a top priority for Oversight Republicans and we will continue to work to protect all American taxpayers," said House Committee on Oversight and Accountability Chairman James Comer (R-Ky.).

"The Biden-Harris Administration allowed fraud to run rampant in federal unemployment programs and is now moving fast to make the pandemic unemployment programs permanent. We owe it to the American people to identify how nearly $200 billion - as estimated from watchdog, agency, and media reports - were stolen from American taxpayers. Today's report shows how the Democrats' spending spree led to historic fraud and commonsense guardrails would have helped prevent the theft of billions of dollars in UI programs. This Committee is committed to preventing waste, fraud, and abuse and will continue to provide solutions to improve improper payment reporting and ensure taxpayer funds are properly managed in the future," said Government Operations and the Federal Workforce Subcommittee Chairman Pete Sessions (R-Texas).

Below are some key findings from the report:

• The U.S. Government Accountability Office (GAO) estimates 11 to 15 percent of total benefits paid during the pandemic were fraudulent, totaling between $100 to $135 billion. The Department of Labor (DOL) Office of Inspector General (OIG) estimates that at least $191 billion in pandemic UI payments could have been improperly paid, with a significant portion attributable to fraud. As of March 2023, states reported recoveries of improper payments in an amount of only $6.8 billion.

• Pandemic UI benefits led to 69 percent of unemployed workers being eligible to receive benefits exceeding 100 percent of their wages and non-wage compensation. Claimants did not have to provide evidence that they were actively seeking work to continue receiving benefits.
• The design of the Pandemic Unemployment Assistance (PUA) program led to massive fraud. During the program's first nine months, claimants did not have to provide any evidence of earnings or prior work which made the program susceptible to fraud. DOL reported that the PUA program had a total improper payment rate of 35.9 percent.

• Due to outdated IT systems, staffing shortages, and new programs being implemented, many states did not deploy any anti-fraud measures, leading to criminals being able to successfully file fraudulent claims and avoid detection. Many states ignored DOL OIG's warnings about modernizing IT and staffing concerns for years and did nothing to address those problems until it was too late.
• Insiders, including those who worked for state workforce agencies, conspired with organized crime factions and other individuals to defraud state UI programs and the states did little to stop them. Some states even hired individuals convicted of identity theft to process UI claims.

• Despite evidence from OIG and GAO that the PUA program suffered from a higher rate of fraud and improper payments than other pandemic UI programs or regular UI, the White House, DOL Acting Secretary Julie Su, and Congressional Democrats have released plans to expand UI by increasing benefits and making PUA recipients permanently eligible for benefits.

To protect taxpayers, below are some recommendations from the report:

• All future temporary UI benefits programs must require claimants to provide proof of prior work before claims will be reviewed for eligibility. Unemployment insurance should always be tied to work.
• All future temporary UI benefits programs must require state workforce agencies to cross-check claimant PII against all available databases, such as federal prisoner databases, as recommended by OIG and law enforcement, prior to approving benefits.
• States and state workforce agencies should prioritize modernizing IT systems to process UI claims, while also considering partnering with employers in the state to fund the necessary investment for these initiatives.
• Individuals with convictions for identity theft, mail and wire fraud, and related criminal convictions should not be hired to process government benefits. If necessary, state laws should be amended to prevent the hiring of these individuals to combat improper payments and fraud.
• Congress should consider extending the statute of limitations for the fraud programs associated with the pandemic UI programs, which are due to expire in March 2025, so that criminals that defrauded taxpayers may be brought to justice.

Read the report, including all key findings and recommendations, here.

• Appendix A
• Appendix B