From the U.S. Government Accountability Office, www.gao.gov

Transcript for: U.S. Comptroller General Testifies to House on Pandemic
Unemployment Insurance Fraud.

Description: In his February 8, 2023, testimony to the U.S. House
Committee on Ways and Means, U.S. Comptroller General Gene L. Dodaro,
head of the GAO, testified on factors that contributed to substantial
unemployment insurance fraud in pandemic recovery programs. He discussed
steps needed for the Department of Labor to strengthen its management of
UI fraud, including developing and implementing an antifraud strategy.

Related GAO Works: GAO-23-106586  

Released: February 2023

 [ Gene Dodaro: ]
  
  Thank you very much, Mr. Chairman. Ranking Member Neal. Members of the
committee. I'm very pleased to be here today to talk about the
unemployment insurance program during the pandemic. The program helped
millions of Americans in need, but there was widespread fraud that
occurred. I'd like to focus my opening remarks today on three reasons
why I believe that happened.

  Number one, neither the Labor Department nor the states were prepared.
In 2016, we worked with the Congress to pass the Fraud Reduction and
Data Analytics Act that was intended for federal agencies to be prepared
to prevent fraud in the first place, which is the most effective way to
deal with this issue. The Labor Department, like many federal agencies,
were slow to implement these framework principles that GAO had outlined
on best practices in the federal government.

  Therefore, they were not as prepared as they should have been before
the pandemic. States had antiquated IT systems. Many of them had known
this, some of them dating back decades. And also right before the
pandemic, the unemployment rate was very low. So the staffing levels of
the State employment agencies were low, so they weren't as prepared
either. We've made recommendations to the Labor Department. They haven't
implemented those fully yet. They're beginning to work on them, but they
need to fully implement our recommendations and be in accordance with
the law. 

  Secondly, the urgent need to get the money out led to trade-offs that
limited the ability of government and the states to achieve the
accountability and transparency objectives of the legislation Congress
intended.

  This was due to allowing people to self-certify their results, their
eligibility for programs, eliminate or reduce the need for them to
provide supporting documentation for their claims of eligibility,
reducing the waiting time that was normally in place at the states
before they provided the first unemployment check. Now, Congress
rectified these issues and December 2020, when they passed the
Consolidated Appropriations Act and then required more documentation for
eligibility determinations.

  The states started taking corrective measures, but this was too late.
Hundreds of billions of dollars had already been spent. And while
they're welcome and they need to be fully implemented and congressional
oversight is needed to make sure this happens, they were not taken as
early as possible to reduce the susceptibility to fraud. As a result of
these trade-offs, self-certification in particular, these programs were
more susceptible to fraud than they would have been otherwise during the
program. 

  Lastly, third, there was an improper payment problem before the
pandemic occurred and the unemployment insurance program. The rates
often were in double digits in terms of improper payments. These are
payments that should not have been made or were made in the wrong
amounts. And there was also fraud in the unemployment insurance program
ahead of time as well. Both of these should have been harbingers to
alert the Labor Department and the states that they needed to take
stronger measures, particularly with the huge amount of claims that
occurred during that period of time. 

  As ranking member Neal mentioned, you know, millions of people became
unemployed at the same time. This rarely has happened in our economy
where so many people have applied for unemployment insurance and been
out of jobs in almost every sector of the economy during this period of
time. So more measures should have been taken. Now, we've made
recommendations in many cases to have this underlying improper payment
problem, and it doesn't happen just in the unemployment insurance
program, it happens in Medicare, Medicaid and 86 different programs
across federal government's activities.

  But it was there, it should have been dealt with. And if we can't deal
with the federal government and the states' level to reduce improper
payments in normal times, then you're bound to have problems when there
are emergencies and there will be future emergencies. And so people need
to get prepared. So I'd urge this committee to continue their oversight
to make sure the Labor Department and the states take action on our
recommendations so that we're much better prepared next time to deal
with these emergency situations.

  So thank you very much Mr. Chairman and members of the committee, I'd
be happy to answer questions at the appropriate time.

[ End ]

For more info, check out our report GAO-23-106586 at: GAO.gov