Court filing
Alert Memorandum — ETA Does Not Require NASWA to Report Suspected UI Fraud Data to OIG
Record facts
| Court | U.S. Department of Labor, Office of Inspector General |
|---|---|
| Filed | 2021-07-01 |
Summary
An alert memorandum dated July 1, 2021 from Carolyn R. Hantz, Assistant Inspector General for Audit at the U.S. Department of Labor Office of Inspector General, to Suzan G. Levine, Principal Deputy Assistant Secretary for Employment and Training, Report Number: 19-21-006-03-315. It states that the Employment and Training Administration does not require the National Association of State Workforce Agencies and its Integrity Data Hub to share suspected unemployment insurance fraud data with ETA or the OIG, as the OIG reads DLMS Chapter 8 to require. The memorandum disputes ETA's reliance on 2 CFR 200.113 and notes ETA's commitment to modify its cooperative agreement with NASWA. It makes two recommendations, including a meeting with the OIG within 30 days on permanent access to IDH data, and references ETA's response as an attachment.
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U.S. Department of Labor
Office of Inspector General
Washington, DC. 20210
Working for America’s Workforce
July 1, 2021
MEMORANDUM FOR:
SUZAN G. LEVINE
Principal Deputy Assistant Secretary for
Employment and Training
FROM:
CAROLYN R. HANTZ
Assistant Inspector General
for Audit
SUBJECT:
Alert Memorandum: The Employment
and Training Administration Does Not
Require the National Association of State
Workforce Agencies to Report Suspected
Unemployment Insurance Fraud Data to
the Office of Inspector General or the
Employment and Training Administration
Report Number: 19-21-006-03-315.
The purpose of this memorandum is to alert you to a concern the Office of
Inspector General (OIG) identified during ongoing criminal investigations of
Unemployment Insurance (UI) fraud related to the Coronavirus Aid, Relief, and
Economic Security Act (CARES Act). The National Association of State
Workforce Agencies (NASWA) is a national organization that represents all 50
state workforce agencies, D.C. and U.S. territories (collectively referred to as
“SWAs” herein). NASWA’s mission is “to enhance the state workforce agencies’
ability to accomplish their goals, statutory roles and responsibilities1.” Part of
NASWA’s duties include running the Integrity Data Hub (IDH). The IDH is a
centralized platform that brings SWAs together to compare and analyze UI
claims data for enhanced detection and prevention of UI fraud and improper
payments. However, the Employment and Training Administration (ETA) does
not require NASWA and its IDH to share suspected UI fraud data with ETA or the
OIG as required by the Department of Labor Manual Series (DLMS) Chapter 8.
ETA believes the reference to Uniform Guidance, 2 CFR Parts 200 and 2900 in
the cooperative agreement between NASWA and ETA, informs NASWA of the
1 https://www.naswa.org/about/bylaws
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requirement to report allegations of fraud. However, these provisions relate to
assessment of risk posed by applicants and recipients, but do not address a
grantee’s obligation to report suspected fraud, waste, abuse, mismanagement, or
misconduct of another individual or entity to DOL or the OIG. ETA needs to take
immediate action and require NASWA to notify ETA or the OIG of suspected UI
fraud, or improper payments.2
In response to a draft of this memorandum, ETA has committed to corrective
action. Specifically, ETA stated it will modify the cooperative agreement between
ETA and NASWA to incorporate a new term and condition that requires NASWA
to share state Unemployment Compensation data that has been flagged by the
UI Integrity Center’s IDH with the OIG for fraud and audit purposes. The OIG
appreciates ETA’s commitment to corrective action and encourages the agency
to expeditiously amend the cooperative agreement with NASWA. However, we
disagree with ETA’s assertion that the DLMS does not require the Department,
NASWA or the states to provide all information flagged by the IDH.
The Inspector General Act (IG Act) established the duties and responsibilities of
the OIG, including activities conducted for the purpose of promoting economy
and efficiency, or preventing and detecting fraud and abuse in DOL programs
and operations.3 To carry out these responsibilities, the OIG is authorized to
have access to all materials relating to DOL programs. Therefore, in accordance
with the IG Act, ETA and NASWA are required to disclose information to the OIG
that NASWA flags in the IDH. ETA must apply policies contained in DLMS
Chapter 8 consistent with the IG Act. The OIG’s responsibilities to detect fraud
and abuse in the UI program existed prior to COVID-19 pandemic benefits, and
will continue beyond those extended benefits. As such, ETA and NASWA have
an ongoing obligation to provide information to the OIG to fulfill its statutory
responsibilities, and not just for the duration of pandemic benefits.
NASWA’s UI Integrity Center
On September 27, 2017, ETA entered into a cooperative agreement with
NASWA’s Center for Employment Security Education and Research (CESER) for
the UI Integrity Center of Excellence, a project which was incorporated into the
grant awards provided by DOL to NASWA’s CESER. ETA’s role in the
agreement is to monitor, oversee, and provide guidance and direction for the
integrity center project. The cooperative agreement also addressed the
responsibilities of the UI Integrity Center of Excellence (Integrity Center) and
continued the Integrity Center’s efforts to support the needs of SWAs in
2 2 CFR Part 200.53 defines improper payments as any payment that should not have been made or that
was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual,
administrative, or other legally applicable requirements.
3 See Sections 4(a) and 6(a) of the Inspector General Act of 1978, Public Law (PL) 95–452; 5 U.S.C. App.,
as amended through P.L. 114–317, enacted December 16, 2016.
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implementing strategies to ensure UI program integrity; to prevent, detect and
recover improper UI payments; and to reduce UI fraud.
The UI Integrity Center operates the IDH tool that provides cross-matching
functionality for SWAs to combat UI fraud. The centralized platform brings
participating SWAs together in collective action to compare and analyze UI
claims data for enhanced detection and prevention of fraud and improper
payments.
According to NASWA, “the UI Integrity Center prevented $243 million in improper
payments from September 2017 through February 2021.” However, the
suspected fraud data collected as a result of cross-matching performed by the
IDH is not shared with ETA or the OIG.
DLMS Chapter 8 requires DOL employees to advise grantees of its requirement
to report allegations of fraud. However, ETA has not advised NASWA of this
requirement and they believe Uniform Guidance 2 CFR 200.113 language in the
cooperative agreement between NASWA and ETA addresses this requirement.
ETA Did Not Advise NASWA of the Requirement to Report Suspected Fraud
DLMS 8-106 (D)(3) requires that agency heads, supervisors, and managers
advise grantees to report, promptly, in writing when possible, to a DOL employee
overseeing their work, the OIG or both, allegations that they reasonably believe
constitute fraud, waste, abuse, mismanagement or misconduct. If sent to DOL,
the agency would be required to report the allegations to the OIG. The DLMS
does not limit the reporting requirement to only those instances that could affect
the award or continuation of a grant.
We asked ETA how they ensured NASWA complied with the DLMS requirement
and whether ETA officials advised NASWA of the requirement. ETA provided the
following statement:
ETA’s cooperative agreement with the National Association of State
Workforce Agencies, Center for Employment Security Education and
Research (NASWA/CESER) for the UI Integrity Operations includes the
reference to Uniform Guidance, 2 CFR Parts 200 and 2900. Uniform
Guidance 2 CFR 200.113, Mandatory disclosures, requires the
non-Federal entity or applicant for a Federal award to disclose, in a timely
manner, in writing to the Federal awarding agency or pass-through entity
all violations of Federal criminal law involving fraud, bribery, or gratuity
violations potentially affecting the Federal award.
We believe that ETA’s cooperative agreement with NASWA/CESER does not
meet the requirements of DLMS 8-106 (D)(3). ETA is improperly relying on
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2 CFR 200.113, “Mandatory disclosures” to satisfy this requirement, when it does
not fully encompass the intended scope of the DLMS. Specifically,
• CFR Part 200, when read in conjunction with 2 CFR Part 180, prescribes
mandatory reporting of violations that may affect DOL’s decision whether
to award a grant or continue a grant, but does not address situations
where the grantee may become, through the normal course of its work,
aware of other suspected fraud, waste, abuse, mismanagement, or
misconduct. Other suspected fraud could include, but is not limited to,
indications of fraud in UI claims;
• The CFR provision referenced by ETA only pertains to NASWA’s duty to
report violations that could potentially affect its grant. As such, ETA’s
notice to NASWA of its reporting requirements only pertains to mandatory
disclosures of “violations potentially affecting the Federal award” (i.e., the
grant);and
• ETA referenced certain CFR provisions included in its grant award;
however, those CFR provisions did not advise NASWA of its obligation to
report other (non-grantee related) “allegations that [NASWA] reasonably
believe[s] constitute fraud, waste, abuse, mismanagement, or
misconduct,” as required by DLMS 8-106(D)(3).
ETA also referred to 2 CFR 2900, which are the Department’s regulations for
grants and agreements. Those provisions relate to assessment of risk posed by
applicants, but do not address a grantee’s obligation to report suspected fraud,
waste, abuse, mismanagement, or misconduct of another individual or entity to
DOL or the OIG. The DLMS requires more from DOL employees and grantees.
The UI program is exposed to substantial risks, including the cost of UI benefit
payments based on fraudulent claims. ETA needs to take immediate action and
require NASWA to notify ETA, the OIG, or both of suspected UI fraud. NASWA
reporting suspected UI fraud to the OIG will assist the OIG to effectively and
efficiently detect and investigate large-scale fraud, deconflict investigations
with SWAs, and identify and share fraud trends with ETA and SWAs in order to
strengthen the UI program and help prevent fraud before it occurs.
ETA has expressed its commitment to continue working with the OIG to combat
UI fraud and improper payments and to modify its agreement with NASWA. We
look forward to continuing to work collaboratively with ETA to improve the
efficiency and integrity of the UI program.
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Recommendations
We recommend the Principal Deputy Assistant Secretary of Employment and
Training:
1. Take immediate action to require NASWA to refer information to ETA and
the OIG on suspected fraud, waste, abuse, mismanagement, or
misconduct, per DLMS 8-106(D)(3). Such actions could include
modification of ETA’s grant award or issuance of unemployment insurance
program policy guidance to ensure ETA complies with the notice
requirement and its grantees comply with the reporting requirements of
the DLMS.
2. Continue to work with the OIG and, within 30 days of this memorandum,
meet with the OIG to develop a permanent approach to OIG access to
IDH data.
ETA provided us their response to the draft alert memorandum and
recommendations. We have included ETA’s response (See Attachment).
cc: Jim Garner, Acting Administrator, Office of Unemployment Insurance
Laura P. Watson, Administrator, Office of Grants Management
Greg Hitchcock, Special Assistant, Office of Grants Management
Julie Cerruti, Audit Liaison
Attachment
AttachmentFile and source
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- REPORT_DOL-OIG_alert-memorandum-the-employment-and-training-administration-does-not-r_2021-07-01.pdf
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- 333,493 bytes
- SHA-256
- 49ec77a9b36fba4882633ffd470f6f57fe79b765be2c7fd31f011c3621b18db0
- Our copy
- REPORT_DOL-OIG_alert-memorandum-the-employment-and-training-administration-does-not-r_2021-07-01.pdf
- Original
- www.oversight.gov