Recommendations included providing the state agencies with resources to address the root causes of the overpayments. Image: Rohane Hamilton/Shutterstock.com
By: FEDweek StaffThe Labor Department inspector general’s office has called on the department to step up its efforts to recoup fraudulent payments made through special unemployment insurance benefits funded by the pandemic-triggered CARES Act.
An outside audit of a sample of 10 state workforce agencies—which operate the program under supervision of Labor’s Employment and Training Administration—estimated that of a total of $10.4 billion in overpayments for the programs reviewed, $676.3 million of which was attributed to fraud. However, the recovery rates “were far below ETA’s core performance measure for regular UI paid from state trust funds.”
Further, the state agencies “waived approximately $601.6 million more in overpayments than they recovered. This highlights the need for SWAs to do more to recover overpayments, as well as prevent improper payments caused by SWAs’ lack of adequate controls,” it said.
In addition, the ETA deferred to states to apply their “finality laws” that limit when a state may reconsider a prior decision or determination made on a CARES Act-funded UI claim. “We are concerned this change in policy may hinder the recovery of overpayments and detection of fraud. Improper payment recovery activities are crucial for maintaining the integrity of the unemployment benefits system and public trust in these programs,” it said.
Recommendations included providing the state agencies with resources to address the root causes of the overpayments, requiring them to maximize all recovery methods, and working with Congress to lift restrictions and develop incentives to recover federally-funded UI overpayments. It said that while those recommendations were provided to the ETA in December, “due to recent senior leadership changes, ETA was unable to provide a timely response.”
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