The Department of Labor’s (DoL) Office of Inspector General (OIG) released a report stating the agency is making progress on improving the Unemployment Insurance (UI) program, which has faced billions of dollars in widespread unemployment compensation fraud during the COVID-19 pandemic.

The UI program is a joint Federal and state program, allowing states to administer their own UI program while following Federal guidelines.

The agency has attempted to respond to the increased number of fraudulent claims during the pandemic, but its efforts are slowly chipping away at what is anticipated to be billions of dollars taken from taxpayers.

The IG report revealed that of the $630 billion in unemployment payments, at least $63 billion “could be paid improperly, with a significant portion attributable to fraud.” Although the IG has yet to complete a full investigation, the report says the actual number “will be higher” than $63 billion.

“Our efforts thus far have directly resulted in the identification and recovery of $96 million in fraud involving the UI program. In addition, we have assisted in the identification and recovery of more than $565 million in fraudulent UI benefits,” the report says.

Earlier this month, Sen. Susan Collins, R-Maine, said her state experienced widespread unemployment compensation fraud firsthand. At the height of the pandemic, the state of Maine had to cancel “more than 100,000 initial claims and weekly certifications that were determined to be fraudulent,” Collins said.

“What we saw were these criminal enterprises ruthlessly exploiting gaps in systems and states all over the country,” Collins said. “Part of the problem is we have these legacy systems that simply cannot handle increased volumes that are slow to adjust for changing results and that cannot easily catch fraud.”

The OIG made a variety of recommendations for the DoL to combat the widespread fraud including:

  • “Facilitate the OIG’s access to UI claim data for audit and investigative oversight purposes through the issuance of Unemployment Insurance Program Letters;
  • Further enhance SWA [State Workforce Agencies] participation in and use of the IDH [Integrity Data Hub] operated by the National Association of State Workforce Agencies;
  • Work with SWAs to ensure that sufficient staffing and system resources are in place to manage sudden increases in the number of UI claims and payments to meet the continued requirements of the CARES Act, and similar future legislation;
  • Incorporate the impact of UI improper payments related to temporary programs, such as those created by the CARES Act, into the traditionally estimated improper payment rate calculations;
  • Identify and implement strategies designed to reduce the UI improper payment rate, including sharing best practices identified among SWAs;
  • Ensure that SWAs are enforcing UI claimants’ requirements to meet the conditions of UI eligibility, including: (1) being available for work; (2) actively seeking work; and (3) accepting suitable and safe work when offered; and
  • Create a rapid response team consisting of federal and state officials capable of providing technical and other assistance to states impacted by major disasters.”

The OIG also recommended Congress consider previous legislative proposals to improve the UI program, such as requiring states to crossmatch UI claims with a variety of databases to ensure their validity. Additionally, the report recommended the DoL and the OIG receive “direct access to UI claimant data and wage records for its oversight responsibilities.”

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Grace Dille
Grace Dille
Grace Dille is MeriTalk's Assistant Managing Editor covering the intersection of government and technology.