House Ways and Means Committee members approved legislation on Feb. 28 that provides states new incentives to go after an estimated $400 billion in COVID-19 unemployment insurance (UI) fraud and extends the federal statute of limitations on prosecution of such crimes.
The proposal is needed, according to Smith, because the Department of Labor inspector general (IG) and Pandemic Response Accountability Committee (PRAC), headed by Department of Justice IG Michael Horowitz, and other law enforcement officials have estimated that as much as $400 billion has been lost to fraudulent claims for federal assistance approved during the COVID-19 pandemic in 2020 and 2021.
Two of the multiple programs approved by Congress and signed into law during the COVID-19 pandemic by Presidents Donald Trump and Joe Biden are the major focus of the anti-fraud effort, including the Small Business Administration’s Economic Injury Disaster Loan and the Paycheck Protection Program. These programs, created to provide financial assistance to small businesses and their employees affected by COVID-19 pandemic lockdowns, disbursed a total of nearly $1.2 trillion.
Smith emphasized during the hearing that the legislation is needed now as a result of Democrats’ failure to conduct proper oversight during the 117th Congress.
He told the Ways and Means Committee during the hearing on its oversight plans for the 118th Congress: “Unemployment fraud is not a victimless crime. At a time when Americans were at their most vulnerable, criminals stole their weekly benefits and identities. Republicans worked for more than two years to protect this program from criminals who exploited it for their own gain.
“We made two requests for oversight hearings, introduced legislation to provide us with the incentives and tools to fight fraud, introduced multiple amendments in this committee to add common-sense safeguards, tried to get the Department of Labor to respond to our requests. All of that was ignored, blocked, and shot down by Democrats in the majority.
“Only $5 billion of the potentially $400 billion has been recovered. Meanwhile, the Biden Administration official responsible for prosecuting fraud has resigned and the position sits vacant to this day. After two years of raising the alarm, House Republicans are turning on the lights about the greatest theft of taxpayer dollars in American history.”
“[The bill] would tell states to hire ‘investigators’ and bill workers for state payment errors innocent workers did not know about and were not responsible for,” Neal told the committee in his opening statement. “And it would have states send those bills as long as 10 years after the mistake was made. These surprise bills would punish America’s families all while stunting accountability for actual criminals.
“[The panel] stepped in when millions of workers found themselves jobless overnight through no fault of their own. Congress ensured they could feed their children and pay their rent. The numbers speak for themselves. These benefits kept millions out of poverty in 2020 and 2021, making the difference for families in communities in every corner of our country. And it served as the trampoline to enable our incredible economic recovery, with record job creation in both years of President Biden’s term so far.”
Among the major provisions of the proposal is one that allows states to keep 25 percent of recovered fraudulent overpayments of federal funds. Most of the money distributed under the two federally funded pandemic relief programs would be administered by state authorities.
Another provision encourages states to use recovered funds to improve program integrity and fraud prevention. The proposal would also allow state governments to keep 5 percent of state UI overpayments, contingent on meeting data matching integrity conditions and dedicating those funds to preventing future fraud.
The proposal extends the federal statute of limitations for criminal charges filed in connection with UI fraud cases from the present five years to 10 years.
The COVID-19 pandemic, which originated in China, began in March 2020 and has killed more than 1 million Americans and 6 million people worldwide. The United States imposed unprecedented measures in response that all but brought the economy to a halt, costing millions of jobs, leaving legions of Americans struggling to buy food and gas, and restricting normal outdoor life for months on end.
