The Department of Labor (DOL) – which provides funding and assistance to states to run their unemployment insurance (UI) programs – remains in need of a better strategy to help prevent UI fraud in light of large-scale fraud in the program during the coronavirus pandemic, according to a new report from the Government Accountability Office (GAO).
The COVID-19 pandemic has exacerbated challenges with states’ UI administration, GAO explained in the report. Congress created four new UI programs during the pandemic, and evidence suggests the total amount of fraud in these programs was over $60 billion – and could actually be much higher.
The DOL has already taken action to address the UI fraud, such as issuing guidance, providing funding to states, and deploying teams to recommend improvements to state UI programs.
However, GAO said DOL still needs to develop an antifraud strategy based on leading practices in GAO’s Fraud Risk Framework – as required by law.
Additionally, the agency has yet to implement six October 2021 recommendations from GAO to address UI fraud risks, the watchdog agency said.
“These are essential pieces to inform an overall antifraud strategy,” GAO wrote. “Without an antifraud strategy, DOL is not able to ensure that it is addressing the most significant fraud risks facing the UI system in alignment with the Fraud Risk Framework.”
The development of the antifraud strategy, consistent with the Fraud Risk Framework, was GAO’s sole recommendation for the agency.
DOL partially agreed with the recommendation, noting that it is in the process of “developing a UI fraud risk profile consistent with leading practices as provided in GAO’s Fraud Risk Framework and working to implement GAO’s previous recommendations.”
However, the agency did not agree that the fraud risk profile and strategy should be completed before implementing new antifraud strategies.
“Prioritizing the completion of GAO’s recommendations before implementing any new antifraud strategies or efforts will not be responsive to the immediate needs of the UI system, which could unnecessarily hinder the public trust,” wrote Brent Parton, DOL’s acting assistant secretary.
Instead, Parton said DOL plans to develop the UI risk profile “in tandem” with ongoing efforts to address fraud.
In a separate report from GAO this week, the agency noted that determining the total extent of fraud can be challenging. GAO said the three key reasons that make this challenging are varying definitions, imperfect detection and reporting, and insufficient data.
The agency said it will continue to explore ways to identify and address potential Federal fraud.