More than $191 billion was wasted due to fraud and mismanagement of Pandemic Unemployment Insurance Relief programs in the federal government’s response to the coronavirus, according to congressional investigators.
Republicans and Democrats on the House Oversight and Accountability Committee agreed the programs were plagued by costly problems, though they continued to disagree on what is needed to prevent recurrence.
Rep. James Comer (R-Ky.) is chairman of the Oversight Committee, while Rep. Jamie Raskin (D-Md.) is the ranking member on the panel.
The report cited a Department of Labor Inspector General investigation that found “that at least $191 billion in pandemic unemployment insurance payments could have been improperly paid, with a significant portion attributable to fraud. ”
The report’s main focus was on three unemployment insurance programs launched as temporary measures by President Donald Trump and then continued and expanded by President Joe Biden: the Federal Pandemic Unemployment Compensation, the Pandemic Emergency Unemployment Compensation, and the Pandemic Unemployment Assistance.
As with conventional unemployment programs, Congress created the three pandemic unemployment insurance programs to be administered by state officials using federal funds. Due to the pandemic, however, the funds were provided with an emphasis on getting the money to recipients as quickly as possible.
According to the Oversight Committee report, the massive waste and fraud resulted from federal officials’ failure to oversee state actions to ensure funds were expended properly. Recipients were frequently not required to provide proof of identity, verification of eligibility, or evidence of seeking employment.
Three states were singled out in the report: California, New York, and Pennsylvania.
California’s failure to check eligibility “led to many bad actors like international organized crime and individual criminals cashing in while eligible claimants were unable to obtain their benefits,” the report said. “Initial reports about the amount of [unemployment insurance] fraud being committed in California were so extreme some industry experts wondered if hackers had gained control” of the state program.
It took months for California officials to heed federal warnings to tighten eligibility verification procedures, and they did not do so consistently, according to the report.
“Pennsylvania failed to use known databases or systems to cross-reference claims for potential fraud. This led to multiple benefits checks being sent to the same address, checks being sent to claimants serving time in prison, and multiple checks being sent to claimants using fraudulently attained Social Security numbers and government identification,” the report said.
New York officials repeatedly ignored federal warnings about growing evidence of fraud and “repeatedly failed to meet benchmarks requested by the Department of Labor ... Lacking urgency, [New York officials] continued to miss deadlines, both set by the state and by the Department of Labor, for no apparent reason and without any explanation.”
Much of the work in preparing the Oversight Committee report was conducted by investigators working for Rep. Pete Sessions (R-Texas), the chairman of the panel’s Subcommittee on Government Operations and the Federal Workforce.
Democrats on the committee, led by Raskin, criticized the Oversight Committee report as unnecessarily “partisan” and failed to acknowledge that multiple studies in previous years documented extensive waste and fraud problems in unemployment insurance programs under leadership from both political parties.
“We don’t need partisan attacks besmirching Blue States or Red States by retreading well-worn oversight paths when we have the solutions right in front of us. We have to make the necessary investments to prevent fraud before it takes place, prosecute when it does, and build on what works,” Raskin said.
The Maryland Democrat also pointed out that the Select Subcommittee on the Coronavirus Crisis, led by Rep. Jim Clyburn (D-S.C.), had extensively documented problems in the unemployment insurance programs.
The committee would “use data analytics and share staff with IGs, providing additional tools, knowledge, and skills necessary to better combat improper payments and fraud,” he said.
