Taxpayers lost $163 billion to COVID unemployment fraud; The GOP has a plan to get some back – InsideSources
With an estimated $163 billion in COVID relief unemployment benefits lost to fraud and abusive payments, House Republicans have offered a way to claw back some of it: Encourage states to chase fraudulent payments and let them keep some of the money.
The Chase COVID Unemployment Fraud Act of 2022 would allow states to keep 25% of any improper payment they recover and use the money to hire anti-fraud investigators and prosecutors, modernize unemployment compensation systems and other business integrity measures programs. States would also be allowed to keep 5% of any overpayments recovered in the future.
While COVID unemployment funding was federal, states were responsible for administering the program and distributing checks. Of the estimated $163 billion lost in abusive payments, only 2% has been recovered, according to the Department of Labor.
The GOP bill would also require states to manage prospective claimants through databases such as the Social Security Administration’s Death Master File, the National Directory of New Hires, and the Data Integrity HUB, an alert center at fraud.
Introduced in May, the bill has 42 co-sponsors. All are Republicans.
As a ranking member of the Ways and Means Committee, Rep. Kevin Brady said he was troubled by the lack of cooperation from fellow Democrats.
“Republicans have repeatedly proposed amendments to prevent fraud from occurring by requiring identification in salaries before sending out these benefits,” Brady said. “These amendments were unanimously rejected. Democrats allocated funds to deal with this COVID fraud, but for the most part they went unspent and weren’t really intended to prevent fraud.
The spokesperson for the Ways and Means Committee declined to comment on the legislation.
The United to Safeguard America from Illegal Trade (USA-IT) organization is on the front line in the fight against international fraud and counterfeiting. Their spokesman, Matt Albence, said the bill is a simple, common-sense approach that should be put in place to prevent future widespread attacks largely from foreign entities.
“I’m sure these offices don’t want the money to be used illegally,” Albence said. “It’s just a matter of the resources available to investigate and invest in identifying fraud. When you get money to do that, it certainly changes the dynamic and makes it a much more feasible activity for those states.
The White House has been aware for more than a year of widespread fraud within the unemployment insurance system. Even with investigations by the Department of Labor, criminals continue to search for vulnerabilities. Woody Talcove, CEO of data analytics firm LexisNexis, said state tax systems, Medicaid benefit systems and state disability systems are also at risk.
Over the past six months, LexisNexis has seen the production of fake driver’s licenses increase by 700%, according to Talcove.
On June 14, Justice Department Inspector General Michael Horowitz testified before the United States House of Representatives Select Subcommittee on the Coronavirus Crisis.
Horowitz is chair of the Pandemic Response Accountability Committee, which has $120 million to review the $5 trillion in federal pandemic relief spending. He said a major cause of widespread fraud was relief programs run by the Small Business Administration and the Department of Labor that relied solely on self-certification.
Horowitz added that agencies should use existing data to verify eligibility, such as the “Don’t Pay” system, which is best at identifying improper payments.
In early June, two bills were passed by the House, increasing the statute of limitations for suing pandemic relief program fraud related to paycheck protection payments and the loan to ten years. in the event of an economic disaster.
An October 2021 report found that $33 billion in grants “had meaningless descriptions that made it difficult to know what the money was being used for.”
“We on the Ways and Means Committee are still awaiting a hearing on this record-breaking pandemic unemployment fraud, and if there’s any interest, we certainly don’t see it,” Brady said.