Pandemic Response Oversight Plan, U.S. Department of Labor Office of Inspector General (Revised June 30, 2023)
Summary
The Office of Inspector General for the U.S. Department of Labor issues a Pandemic Response Oversight Plan revised June 30, 2023. It states that the OIG has had to substantially reduce planned pandemic response oversight efforts due to budgetary constraints, after Congress appropriated a total of $38.5 million in supplemental funding during the pandemic. It reports that, as of June 9, 2023, the OIG pandemic oversight has resulted in 35 published audit reports with 90 recommendations and more than 1,350 indictments/initial charges with over 720 convictions. It also states that the OIG is still reviewing approximately 163,000 open unemployment insurance fraud complaints, and that as of February 8, 2023 it estimated at least $191 billion in pandemic UI payments could have been improper payments.
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“Pandemic Response Oversight Plan, U.S. Department of Labor Office of Inspector General (Revised June 30, 2023).”
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Pandemic Response Oversight Plan
Office of Inspector General for the U.S. Department of Labor
Revised June 30, 2023
U.S. Department of Labor – Office of Inspector General
U.S. DEPARTMENT OF LABOR OFFICE OF INSPECTOR GENERAL
PANDEMIC RESPONSE OVERSIGHT PLAN
Revised June 30, 2023
Since we published our 2022 Pandemic Response Oversight Plan update, 1 the Office of
Inspector General (OIG) has had to substantially reduce our planned pandemic
response oversight efforts due to budgetary constraints. The degree to which we can
continue our oversight work depends on the availability of resources. We will continue to
efficiently use our available resources for pandemic-related audit and investigative
efforts; however, at current funding levels, resource limitations 2 have resulted and will
continue to result in a reduction of effort in pandemic-related oversight. Moreover, the
statute of limitations for pandemic-related fraud will soon expire 3 and we continue to
face challenges with data access. 4
The OIG greatly appreciates that Congress appropriated a total of $38.5 million in
supplemental funding during the pandemic to fund the OIG’s oversight of expanded
Department of Labor (DOL or Department) programs and operations. However, most of
this funding will be fully expended by the second quarter of Fiscal Year (FY) 2024. In
addition, the OIG’s FY 2021 and FY 2022 appropriations remained flat and the
FY 2023 appropriation was $11 million less than requested. As a result, the OIG is in
the process of significantly reducing its workforce through attrition.
The immense challenges we continue to face have not stopped OIG auditors or
investigators from producing impactful pandemic-related oversight work. As of
June 9, 2023, the OIG’s pandemic response oversight work has resulted in 35 published
audit reports with 90 recommendations to reduce programmatic vulnerabilities and
$68.7 billion in funds for better use. Our pandemic-related investigations have resulted
in more than 1,350 indictments/initial charges with over 720 convictions, over
13,000 months of incarceration ordered, and monetary results in excess of $930 million
(see Table 1).
Table 1: Cumulative Results as Reported in Pandemic Response Oversight Plans
Results 2022 2023
Audit Reports 21 35
Recommendations 57 90
Funds for Better Use $39.2 billion $68.7 billion
Indictments/Initial Charges 800+ 1,350+
Convictions 230+ 720+
Months of Incarceration Ordered 7,800+ 13,000+
Investigative Monetary Results $830 million+ $930 million+
1
Published on March 21, 2022
2
For further details, please see the section on Budgetary Impact on Pandemic Response Oversight.
3
For further details, please see the section on the Statute of Limitations’ Expiration.
4
For further details, please see the section on Data Access.
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U.S. Department of Labor – Office of Inspector General
However, there is much more to do. Even though the COVID-19 public health
emergency has ended, the OIG continues its work focused on assisting DOL to recover
from this unprecedented emergency and prepare for any future emergencies. For
example, our investigators continue to be overwhelmed as they work tirelessly to seek
recoveries from and indictments for those responsible for pandemic-related fraud.
Importantly, the OIG is still reviewing approximately 163,000 open unemployment
insurance (UI) fraud complaints received throughout the pandemic and continues to
receive between 100 to 300 new UI fraud complaints each week. We are continuing to
use the data analytics systems we built and expanded during our early
pandemic-related oversight to further detect and deter UI fraud and are examining
recoveries including the impact of waivers on UI overpayments and fraud investigations.
As of February 8, 2023, we estimated at least $191 billion in pandemic UI payments
could have been improper payments, 5 with a significant portion attributable to fraud. For
example, as of September 2022, we identified a total of $45.6 billion 6 in potentially
fraudulent UI benefits paid from March 2020 through April 2022 in four specific high-risk
areas, such as to multistate claimants and deceased persons. 7 We shared our
methodology and underlying data with the Department for further dissemination to the
states, and we recommended DOL establish controls to mitigate fraud and other
improper payments to ineligible claimants. Our audits to examine the extent to which
DOL and states have taken action to follow up on these potentially fraudulent UI claims
identified and referred by the OIG are in-progress.
This plan revision provides the following: (1) details of the budgetary impact to
investigative and audit work as well as from the President’s recent proposal, including
the design of and impact to the status of our work plans; (2) impact of the expiration of
the statute of limitations; (3) impact from the data access challenges; (4) a summary
description of our results so far; and (5) a list of in-progress and planned work.
BUDGETARY IMPACT ON PANDEMIC RESPONSE OVERSIGHT
On March 27, 2020, shortly after the onset of the COVID-19 pandemic, the Department
and other federal agencies were tasked with rapidly implementing programs in a
manner that met the intent of the Coronavirus Aid, Relief, and Economic Security
(CARES) Act. An exceptional level of transparency, implementation plans, and
oversight controls was critical to ensure the effective and efficient use of the estimated
$2.3 trillion in CARES Act funding, thereby increasing the Inspectors General work to
detect and deter fraud, waste, and abuse. Under the CARES Act, the OIG received an
5
For further details, please see the section on Reducing Improper Payments.
6
Alert Memorandum: Potentially Fraudulent Unemployment Insurance Payments in High-Risk Areas
Increased to $45.6 Billion, Report No. 19-22-005-03-315 (September 21, 2022), available at:
https://www.oig.dol.gov/public/reports/oa/2022/19-22-005-03-315.pdf
7
For further details, please see Figure 4 and context on our identification of $45.6 billion in potential
fraud.
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U.S. Department of Labor – Office of Inspector General
appropriation of $26 million to oversee DOL’s response to the COVID-19 pandemic,
including $25 million to oversee the unprecedented expansion of UI programs.
The OIG immediately began our pandemic response oversight work with the issuance
of advisory reports based on past programmatic issues to help the Department avoid
historical pitfalls and fraud alerts to inform the public who may be exploited by
fraudsters. Less than a month after the CARES Act passed, on April 15, 2020, we
published our first pandemic response oversight plan, structuring the work in four
phases to address known and expected risks for DOL programs resulting from the
pandemic. Our work plans drew heavily from our work on DOL’s previous emergency
responses, including from the American Recovery and Reinvestment Act of 2009, as
well as significant issues we have reported since then.
On April 27, 2021, shortly after the American Rescue Plan Act of 2021 (ARPA) provided
the OIG an additional $12.5 million to further oversee DOL pandemic response, we
published an updated plan, including early results. On March 21, 2022, we published a
second update. We noted these plans were subject to change and would evolve as the
OIG continued to conduct risk assessments to identify specific areas that might
significantly impact workers during emergencies. This plan revision is similarly subject
to change and evolution, including from the ongoing and any future impacts from
resource constraints.
We designed our four-phased plan to provide recommendations to DOL to address
current and emerging vulnerabilities with the COVID-19 response and to prevent similar
vulnerabilities from hampering preparedness for future emergencies (see Figure 1).
Figure 1: The OIG’s Four-Phased Design for Pandemic Response Oversight
During Phases 1 and 2, we reviewed DOL’s plans, guidance, and initial implementation,
highlighting significant vulnerabilities. During Phase 3, which is ongoing, we are taking a
deep dive into key and emerging issues. Our Phase 4 work plans include reporting on
lessons learned for UI, worker safety and health, and employment training and recovery
from the overall toll on workers since COVID-19 first appeared in the United States.
The OIG offers an important investment for U.S. taxpayers, particularly in times of
resource constraint. Over the past 10 fiscal years, on average, every dollar invested in
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U.S. Department of Labor – Office of Inspector General
the OIG resulted in a return on investment of nearly 75 dollars to the federal
government and American taxpayers. Over this period, the OIG identified more than
$69 billion in monetary results including questioned costs and funds recommended to
be put to better use. However, as previously mentioned and detailed in this section, this
investigative and audit oversight work will be diminished due to budgetary constraints.
BUDGETARY IMPACT ON INVESTIGATIVE
OVERSIGHT WORK AND PLANS
The OIG’s investigative work began by addressing and continues to address the
exponential increase of fraud in the UI program that occurred during the pandemic
program period. The OIG has opened more than 200,000 investigative matters relating
to UI benefits paid under the CARES Act and subsequent legislation. Of the more than
200,000 investigative matters opened, approximately 163,000 are still under review (see
Figure 2).
Figure 2: Extraordinary Increase in and Status of
Open Pandemic UI Investigative Matters
200,000
173,533 177,541
180,000 163,426
160,000
140,000 142,985
120,000
100,000 105,010
The OIG opened more than
80,000 200,000 invesgave maers of
which approximately 163,000
60,000 are sll under review.
40,000
19,022
20,000 2,456
48
-
Apr-20 Aug-20 Dec-20 Apr-21 Aug-21 Dec-21 Apr-22 Aug-22 Dec-22 Apr-23
In our 2022 plan, we highlighted that, in response to the extraordinary increase in
oversight demands, the OIG: hired additional criminal investigators, increased the
caseload of investigators already on-board, deployed federal and contract staff to
review DOL and State Workforce Agencies’ (SWA) efforts, and strengthened our data
analytics program. We also had plans to hire additional investigators to address the
increasing number of fraud referrals. We further noted that we would pursue open UI
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U.S. Department of Labor – Office of Inspector General
fraud complaints through at least 2026. However, in many cases, the statute of
limitations will expire sooner than that.
Due to budget constraints, we are now in the process of reducing our investigative
capacity by approximately 20 percent by the end of FY 2023, with an additional
20 percent reduction expected in FY 2024. As a result, the OIG will not have the
investigative capacity to review the 163,000 open UI fraud complaints and to conduct
investigations of each instance of suspected fraud before the statute of limitations
expires.
As of May 2023, the OIG has just over 100 field agents to investigate the approximately
1,900 investigative matters currently assigned to our field offices, an average of
17 investigative matters per agent. The ideal caseload per agent is between 5 and
10 open investigative matters, which ensures that each matter can proceed efficiently
through the investigative and prosecutorial processes. The approximate 1,900 currently
assigned matters does not include more than 160,000 open UI fraud complaints being
reviewed by our triage team.
Based on past oversight experience of federal UI disaster aid, the OIG expects to be
actively investigating UI fraud for years to come. However, investigations will end when
the statute of limitations toll—which will currently begin in early 2025 unless Congress
acts to extend the statute.
BUDGETARY IMPACT ON AUDIT OVERSIGHT
WORK AND PLANS
Less than a month after the CARES Act passed, we issued an initial UI advisory report. 8
We advised that, in light of the unprecedented demands on the UI system, more needed
to be done to ensure those receiving UI benefits were eligible and received accurate
and timely payment and we have continued to advise DOL to strengthen the UI program
to better detect and deter fraud and to recover improper payments. We remain
particularly concerned about deployment of UI benefits in response to emergencies,
including natural disasters and economic downturns.
In total, we have issued 35 pandemic-related reports, 9 including three Congressional
hearing statements from Inspector General Larry D. Turner 10 and eight alert
memoranda for urgent concerns. In our 2022 plan, we reported that, based on
significant issues identified during the first two phases of our pandemic response
oversight plan, continuing risk assessments, and emerging issues, the OIG had
8
Advisory Report, CARES Act: Initial Areas of Concern Regarding Implementation of Unemployment
Insurance Provisions, Report No. 19-20-001-03-315 (April 21, 2020), available at:
https://www.oig.dol.gov/public/reports/oa/2020/19-20-001-03-315.pdf
9
The 35 reports include 31 reports listed on our Pandemic Response Oversight portal, as well as
4 financial reports that have pandemic-related findings. The portal is available at:
https://www.oig.dol.gov/OIG_Pandemic_Response_Portal.htm.
10
Congressional testimony is available on our website at: https://www.oig.dol.gov/testimony.htm.
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U.S. Department of Labor – Office of Inspector General
expanded our Phase 3 work. For audit activities, we had also identified three main
areas of focus: (1) worker benefit programs, including UI and workers’ compensation;
(2) worker safety and health, including occupational and miner safety and health, and
workplace rights; and (3) employment and training programs, including grants and the
Job Corps program. Overall, we have issued about half of our audit pandemic response
oversight reports (see Figure 3).
Figure 3: Focus Areas and Status – Audit Pandemic Response Oversight
Worker Safety
and Health, and 6 23
Workplace Rights
7
Worker Benefit
Programs,
6 including UI
Employment 5 Solid pie = Completed work
and Training
22 Patterned pie = In-progress,
Programs planned, and potential work
However, in our previous pandemic response oversight plan, we had also highlighted
our plans to address the increased need for oversight of DOL’s programs. To
accomplish the planned audit work, the OIG had increased the number of full-time
equivalent employees authorized to support the Office of Audit and had awarded
multiple contracts to external independent audit firms.
Due to budget constraints, the OIG had to stop hiring efforts and reduce our authorized
full-time equivalent employee strength. We also cancelled 10 contracted audits related
to pandemic oversight planned for FY 2023. One of those audits was in the area of
dislocated worker grants, five in the area of job training, one in the area of worker
safety, and three in the area of UI (see Table 2 for more details).
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U.S. Department of Labor – Office of Inspector General
Table 2: FY 2023 Contract Audits Cancelled Due to Resource Limitations
Audit Title Audit Purpose
Employment and Training Determining participants’ satisfaction with grant-funded
Administration Dislocated services for employed participants in positions such as:
Worker Grant Program support services, delivery/logistics, manufacturing, home
Participant 11 Survey services for homebound individuals, and intake at medical
and satellite quarantine facilities
COVID-19: Employment and Focusing on how the COVID-19 pandemic had caused
Training Administration many job training programs to cease operation,
Grantee Sub-Recipients 12 — interrupting the participants’ job training and preventing
Five contracted audits cancelled them from getting a job in the areas in which they were
trained
COVID-19: OSHA Effectiveness Following up on the impact on workers of potential
of Whistleblower Complaint delays—which could leave workers to suffer emotionally
Corrective Actions 13 and financially—in processing whistleblower complaints
received during the pandemic
National Pandemic UI Claimant Capturing the views and experiences of the
Satisfaction Study pandemic-related UI benefit program recipients
DOL’s Use of ARPA Funding to Ensuring the Office of Unemployment Insurance
Invest in the Modernization of Modernization was adequately leading the effort to
State UI Systems develop a centralized information technology solution to UI
benefits and incorporating various stakeholder needs while
also ensuring support to American workers
COVID-19: Best Practice Identifying elements needed for state UI programs to
Benchmark Study successfully respond to a disaster of a similar magnitude
in the future
The cancellation of these projects will result in fewer audits and recommendations for
improvement of pandemic-related programs and operations.
The OIG has less than 100 auditors to oversee DOL programs that cost taxpayers
billions of dollars each year. The OIG intended to use its remaining ARPA funds to
conduct additional oversight work using contractors and to support that work using
contract data analysts and scientists. However, due to lower-than-expected funding
levels, the OIG must use the remaining ARPA funds for salaries and benefits of
employees brought on board during the pandemic to assist with the oversight of
pandemic-related programs and operations.
The reduction in the OIG’s audit capacity is particularly of great concern given the
detriment to our oversight of DOL’s preparedness for future emergencies. For example,
we have reported deficiencies in the Occupational Safety and Health Administration’s
11
Participants were to include workers: laid off due to quarantine orders or business closures, unable to
go to their regular workplace due to social distancing requirements, and missing work to care for family.
12
Any audits performed in this area will be conducted by OIG staff.
13
The OIG planned to perform this audit using contract auditors, but instead decided to prioritize this
audit over the National Emphasis Program audit and perform the work using OIG audit staff in FY 2024.
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U.S. Department of Labor – Office of Inspector General
(OSHA) programs that subjected U.S. workers to greater safety risk 14 despite OSHA’s
guidance and actions during the pandemic. OSHA received an increased number of
safety and health complaints during the pandemic, but decreased the number of
inspections and most inspections were not conducted onsite. We have ongoing and,
subject to resource availability, planned audits on OSHA, including to assess the
actions OSHA has taken to protect supply chain workers—such as those at online
retailers’ warehouses—and the adequacy of OSHA’s plans to prepare for future
pandemics.
The OIG also has similar plans to address deficiencies noted within the Employment
and Training Administration’s (ETA) job training programs and UI, the Mine Safety and
Health Administration, and the Veterans Employment and Training Services. Now that
the COVID-19 emergency has ended, there is still much more to do to ensure the
Department is prepared for the next emergency. 15
IMPACT OF THE PRESIDENT’S RECENT
ANTI-FRAUD PROPOSAL
On March 2, 2023, the White House released the President’s pandemic anti-fraud
proposal 16 to: (1) provide DOL OIG with an additional $100 million to hire investigators
to pursue fraud in the UI programs; (2) increase the statute of limitations to 10 years for
fraud against the pandemic UI programs; and (3) ensure the OIG can easily access
multistate UI program data to detect fraud, which would allow the OIG to continue and
expand on its efforts to combat fraud in the UI programs.
The OIG would need to have immediate access to these funds to reverse its current
course of reducing its anti-fraud efforts in the UI programs due to lack of sufficient
resources. If funded, it would take between 6 and 12 months to increase OIG staffing
levels and award the necessary contracts.
STATUTE OF LIMITATIONS’ EXPIRATION
In addition to the budgetary impact, our pandemic response oversight investigations will
be impacted when the statute of limitations expires. Currently, the statute of limitations
for many pandemic UI cases will start to expire in early 2025 as the statutes most often
used to prosecute UI fraud have 5-year limitations. We are concerned that, unless the
14
COVID-19: Increased Worksite Complaints and Reduced OSHA Inspections Leave U.S. Workers’
Safety at Increased Risk, Report No. 19-21-003-10-105 (February 25, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-003-10-105.pdf
15
For further details, please see the section on Ongoing and Planned Pandemic Response Oversight
Work.
16
The White House, “FACT SHEET: President Biden’s Sweeping Pandemic Anti-Fraud Proposal: Going
after Systemic Fraud, Taking on Identity Theft, Helping Victims,” press release (March 2, 2023), available
at: https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/02/fact-sheet-president-
bidens-sweeping-pandemic-anti-fraud-proposal-going-after-systemic-fraud-taking-on-identity-theft-
helping-victims/
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U.S. Department of Labor – Office of Inspector General
statute of limitations for fraud associated with pandemic-related UI programs is
extended, many groups and individuals that have defrauded the UI program may
escape justice. Even with the OIG’s tireless efforts, the current statute of limitations
associated with UI fraud means federal law enforcement may still fall short in fully
investigating and prosecuting the most egregious cases of UI fraud, especially given the
volume and complexity of UI fraud matters we are tasked to investigate. This issue is
further exacerbated by the OIG’s limited resources and the resulting decrease in
investigative capacity.
Pandemic-related UI fraud referrals that we receive often include complex schemes
involving criminal enterprises and bad actors who use sophisticated techniques to
maintain their anonymity. For instance, in a recent pandemic-related UI fraud
investigation into the theft of over $4 million in UI benefits from a SWA, conspirators
orchestrated a scheme to file UI claims using stolen identities, which were often
associated with elderly citizens. 17 The conspirators’ scheme included opening bank
accounts using the stolen identities, purchasing money orders made out to themselves
and to an online vehicle auction company, and laundering the UI funds by using the
money orders to purchase salvaged automobiles in the United States and ship them to
Nigeria. They also facilitated the transfer of conspiracy proceeds to overseas bank
accounts in Nigeria. This complex fraud investigation spanned both domestic and
foreign jurisdictions. The defendants have been convicted of conspiracy to commit wire
fraud.
Criminal investigations such as the above require significant resources and time. In
August 2022, an extension of the statute of limitations was implemented for crimes
involving the U.S. Small Business Administration’s Paycheck Protection Program and
Economic Injury Disaster Loan program. 18 The statute of limitations should also be
extended when pandemic-related UI programs are defrauded. The expansion of the
statute of limitations would provide investigators and prosecutors time to effectively and
efficiently pursue and hold accountable those who defrauded the UI program and
victimized the American people during the pandemic.
DATA ACCESS
The OIG’s lack of ongoing, timely, and complete access to UI claimant data and wage
records from SWAs remains a significant challenge. 19 This deficiency directly and
17
DOJ, U.S. Attorney’s Office, Northern District of Alabama, “Georgia Resident Pleads Guilty to
COVID-19 Unemployment Fraud Targeting Several States,” press release (June 8, 2022), available at:
https://www.justice.gov/usao-ndal/pr/georgia-resident-pleads-guilty-covid-19-unemployment-fraud-
targeting-several-states
18
The White House, “Bills Signed: H.R. 7334 and H.R. 7352,” (August 5, 2022), available at:
https://www.whitehouse.gov/briefing-room/legislation/2022/08/05/bills-signed-h-r-7334-and-h-r-7352/
19
Semiannual Report to Congress, Office of Inspector General for the U.S. Department of Labor,
Volume 89 (October 1, 2022-March 31, 2023), available at:
https://www.oig.dol.gov/public/semiannuals/89.pdf
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U.S. Department of Labor – Office of Inspector General
adversely impedes the OIG’s ability to provide independent oversight and combat fraud,
waste, and abuse to help DOL reduce future improper payments in its programs,
including regular and temporary UI programs. The power and use of data and predictive
analytics enables the OIG to continuously monitor DOL programs and operations to
detect and investigate fraud. Continuous monitoring serves as a deterrent to fraud,
allows the OIG to promptly discover areas of weakness, and assists DOL management
to timely correct problems. However, the OIG’s ability to proactively detect UI fraud
through our audit and investigative activities continues to be impacted by the data
access concerns detailed in our March 2023 Congressional testimony. 20
To effectively address the challenges posed by the pandemic, we took a proactive
stance, employing data analytics at both national and state levels to identify high-risk
areas within the UI program. During the early stages of the pandemic, DOL asserted it
lacked the authority to require SWAs to provide UI data to the OIG for audits and
investigations, with limited exceptions. In response to this challenge, we took the
unprecedented step of issuing Inspector General subpoenas to SWAs, compelling them
to provide the necessary claims data.
Collaboratively, the OIG’s audit and investigative activities have identified $45.6 billion
of potential fraud paid from March 2020 through April 2022 in four specific high-risk
areas, to individuals with Social Security numbers: (1) filed in multiple states, (2) of
deceased persons, (3) of federal prisoners, and (4) used to file UI claims with
suspicious email accounts (see Figure 4). 21
Figure 4: Four High-Risk Areas for Potential UI Fraud
We shared our methodology and underlying data with the Department for further
dissemination to the states. We are currently examining whether states took effective
measures to address the potential fraud.
As part of our recommendations regarding these high-risk areas, we recommended
ETA in collaboration with the states establish effective controls to mitigate fraud and
20
“Waste, Fraud, and Abuse Go Viral: Inspectors General on Curing the Disease,” Hearing, Statement for
the Record of Larry D. Turner, Inspector General, U.S. Department of Labor; House Committee on
Oversight and Accountability, Subcommittee on Government Operations and the Federal Workforce
(March 9, 2023), available at: https://www.oig.dol.gov/public/testimony/03092023.pdf
21
During the initial phases, we identified more than $5.4 billion in these four high-risk areas. This total
increased to $45.6 billion in the same areas. This increased identification was reported in Alert
Memorandum: Potentially Fraudulent Unemployment Insurance Payments in High Risk Areas Increased
to $45.6 Billion, Report No. 19-22-005-03-315 (September 21, 2022), available at:
https://www.oig.dol.gov/public/reports/oa/2022/19-22-005-03-315.pdf.
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U.S. Department of Labor – Office of Inspector General
other improper payments to ineligible claimants. We also recommended ETA implement
immediate measures to ensure ongoing OIG access to UI claims data for audit and
investigative purposes and expedite regulatory updates to require ongoing disclosures
of UI information to the OIG for audits and investigations of federal programs.
Our special agents used data analytics extensively on the national and state level to
proactively identify those areas that pose the greatest risk to the UI program. Our data
analytics program identified numerous fraud typologies plaguing the UI program
nationwide, allowing our special agents and task force partners to focus their efforts on
investigative matters that involve the greatest loss of funds to the UI program. Data
analytics further allowed us to share information with ETA so that it could better assist
SWAs in detecting fraud sooner and implementing safeguards to avoid paying
fraudulent claims. When investigations or data analytics identified programmatic
vulnerabilities, our special agents coordinated with audit staff to ensure that
weaknesses were addressed by the Department.
In response to our recommendations, ETA has taken some actions to support the OIG
having access to UI data consistent with the Inspector General Act of 1978, as
amended. It is also in process of taking additional action to revise its regulations.
However, until the Department implements a permanent solution ensuring the OIG’s
complete and timely access to UI program data and information, the Department’s
current regulations will renew impediments to the OIG’s access to data as was
experienced prior to and during the pandemic and may necessitate additional
subpoenas. The historic levels of improper payments that the OIG has identified,
including potential fraud, supports the conclusion that the OIG’s continued access to
state UI data is imperative.
To aid in resolving this issue, we previously requested that Congress consider
legislative action to authorize DOL and the OIG to have unfettered access to state UI
claim data and wage records for our oversight responsibilities. Unfettered access to
states’ UI claimant data and wage records systems would further enable the OIG to
quickly identify large-scale fraud and expand its current efforts to share emerging fraud
trends with ETA and SWAs to strengthen the UI program and deter fraud. In addition,
conducting data analytics from such access would further enable our auditors to identify
program weaknesses and recommend corrective actions that could improve the
timeliness of UI benefit payments and the integrity of the UI program.
The access to state UI claim data and data analytics has expanded the scope of our
oversight work, enabling us to leverage powerful tools to detect and address fraudulent
activities. For example, data analytics empowered our auditors to perform high-level
analysis and investigators to focus their investigative efforts on cases involving
substantial financial losses. Furthermore, access to states’ claims data was crucial for
the OIG, enabling us to continue to process over 200,000 UI complaints and perform
the necessary fraud analysis.
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U.S. Department of Labor – Office of Inspector General
RESULTS FROM PANDEMIC RESPONSE OVERSIGHT WORK:
CRITICAL NEED FOR DOL PREPAREDNESS
As previously mentioned, as of June 9, 2023, the OIG’s pandemic response oversight
work has resulted in 35 published audit reports with 90 recommendations to reduce
programmatic vulnerabilities and $68.7 billion in funds for better use. Our
pandemic-related investigations have resulted in more than 1,350 indictments/initial
charges with over 720 convictions, over 13,000 months of incarceration ordered, and
monetary results in excess of $930 million. Much of our work has had to focus on
unemployment insurance, including impactful collaboration between our auditors,
investigators, and data scientists; in several program areas, our pandemic-related
reporting has demonstrated the critical need for DOL preparedness.
The following section, summarizing our results so far, is ordered as follows:
• Worker Benefits: UI
• Worker Benefits: Workers’ Compensation
• Worker Safety and Health and Workplace Rights
• Employment and Training
• Status of Audit Recommendations
WORKER BENEFIT PROGRAMS: UI
A PERFECT STORM
At the start of the pandemic, we had significant concerns regarding the UI programs,
based on both previous OIG work regarding emergency response and on the high-risk
nature of the programs. The pandemic period represented the largest increase in UI
claims since the Department began tracking data in 1967. Prior to the pandemic,
numbers of UI claims were low; within 2 to 3 weeks, initial UI claims rose to 10 times
pre-pandemic levels, far higher than state systems were designed to handle. 22
Our initial UI advisory report identified six initial areas of concern 23 for ETA and the
states to consider while implementing CARES Act UI provisions: (1) state preparedness
(including staffing and systems), (2) initial eligibility determination, (3) benefit amount,
(4) return to work, (5) improper payment detection and recovery, and (6) program
monitoring. Our identification of these areas represents years of work relating to DOL’s
UI program, including the use of prior stimulus funds and response to past disasters.
22
COVID-19: States Struggled to Implement CARES Act Unemployment Insurance Programs,
Report No. 19-21-004-03-315 (May 28, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-315.pdf
23
Advisory Report: CARES Act: Initial Areas of Concern Regarding Implementation of Unemployment
Insurance Provisions, Report No. 19-20-001-03-315 (April 21, 2020), available at:
https://www.oig.dol.gov/public/reports/oa/2020/19-20-001-03-315.pdf
Page 12 of 30
U.S. Department of Labor – Office of Inspector General
Our concerns included high risks of improper payments from the Pandemic
Unemployment Assistance (PUA) program’s reliance solely on self-certification. Our
May 26, 2020, alert memorandum estimated the PUA program’s cost at nearly
$110 billion with a significant risk of improper payments, including fraud. 24 We advised
ETA that states needed to implement measures, such as requiring claimants to
document earnings to substantiate the initial determination and warned that, without
additional tools, the PUA program was at substantial risk of losing millions of taxpayer
dollars. In December 2020, Congress addressed the self-certification issue under the
Continued Assistance for Unemployed Workers Act of 2020, requiring individuals
receiving PUA to substantiate their employment.
However, as we reported in September 2022, in the first 6 months after the CARES Act
passed, four states paid $1 in $5 in initial PUA benefits to likely fraudsters. 25 We also
found that, in the first year after the CARES Act passed, more than six million American
workers waited at least a month for pandemic-related UI benefits. 26
Further, our work found that states had been slow to modernize their legacy information
technology (IT) systems in the more than 10 years between the Great Recession and
the COVID-19 pandemic. The OIG expressed its concern that legacy IT systems—
coupled with states’ staffing—would continue to impede the management and oversight
of UI benefits. Our subsequent reports identified continued programmatic weaknesses
in each of these same areas. These weaknesses led to workers unemployed through no
fault of their own suffering lengthy delays for basic subsistence funds—likely increasing
bad outcomes such as food scarcity and homelessness—while a substantial amount of
benefits were left vulnerable to fraud, waste, and abuse.
Our initial report also advised that identity thieves and organized criminal groups had
found ways to exploit program weaknesses. Over the past 3 years, our reporting has
identified continuing program weaknesses in internal controls, reporting, and program
monitoring. Because some states were not prepared to process the volume of new
claims under new UI programs, some internal fraud controls were not initially
implemented. During his March 2022 Congressional testimony,
24
Alert Memorandum: The Pandemic Unemployment Assistance Program Needs Proactive Measures to
Detect and Prevent Improper Payments and Fraud, Report No. 19-20-002-03-315 (May 26, 2020),
available at: https://www.oig.dol.gov/public/reports/oa/2020/19-20-002-03-315.pdf
25
Of the 4 states we tested, from March 28, 2020, through September 30, 2020, we estimated
$30.4 billion of the $71.7 billion in PUA and Federal Pandemic Unemployment Compensation benefits
were paid improperly (42.4 percent). We estimated $9.9 billion of that was paid to likely fraudsters
(13.8 percent).
26
COVID-19: ETA and States Did Not Protect Pandemic-Related UI Funds from Improper Payments
including Fraud or from Payment Delays, Report No. 19-22-006-03-315 (September 30, 2022),
available at: https://www.oig.dol.gov/public/reports/oa/2022/19-22-006-03-315.pdf
Page 13 of 30
U.S. Department of Labor – Office of Inspector General
Inspector General Larry D. Turner reported that the unprecedented infusion of federal
funds into the UI program provided a high-value target to exploit. 27
Combined with easily attainable stolen personally identifiable information and continuing
UI program weaknesses, the infusion of funds allowed the perfect storm for criminals to
defraud the system. For example, as time went on, one fraudster could have been
issued several UI debit cards, with tens of thousands of dollars on each card. In fact, in
an audit, we found 1 claim that was filed from a 3-bedroom house shared the same
physical address as 90 other claims and used the same email address as 145 other
claims. 28 In total, the likely fraudster(s) received more than $1.5 million in
unemployment benefits.
Our investigators have identified crimes related to UI fraud both throughout the United
States and by foreign bad actors, and our investigative work has resulted in the
conviction of over 720 criminals, including:
• two members of the Robles Park criminal organization—whose members and
associates engaged in acts involving murder, assault, narcotics trafficking,
identity theft, and other crimes;
• a massive and sophisticated criminal enterprise targeting Maryland’s UI system
for more than $500 million;
• former employees of more than one state or federal agency who targeted more
than $5 million;
• individuals using sham companies to obtain $1.1 million;
• federal and state inmates who targeted more than $2 million;
• a Nigerian national sentenced for both UI and elder fraud schemes; and even
• a YouTube rapper who was sentenced to 77 months in prison and ordered to pay
more than $700,000 in restitution after bragging about his efforts to defraud a
state UI agency.
As we reported, ETA and states made significant efforts under extreme circumstances;
however, the efforts were not sufficient to protect pandemic-related UI funds from
historic levels of improper payments. ETA’s oversight was not timely enough, it allowed
states to suspend a primary oversight tool for the first 3 months of the CARES Act UI
programs, and it has yet to report either improper payment data from those months or
the improper payment rate estimate for the PUA program.
We remain significantly concerned about the expeditious and effective deployment of UI
benefits, especially in response to natural disasters and emergencies. Further, our most
27
“Pandemic Response and Accountability: Reducing Fraud and Expanding Access to COVID-19 Relief
through Effective Oversight,” Hearing, Statement for the Record of Larry D. Turner, Inspector General,
U.S. Department of Labor; Senate Committee on Homeland Security and Governmental Affairs
(March 17, 2022), available at: https://www.oig.dol.gov/public/testimony/20220317.pdf
28
COVID-19: ETA and States Did Not Protect Pandemic-Related UI Funds from Improper Payments
including Fraud or from Payment Delays, Report No. 19-22-006-03-315 (September 30, 2022),
available at: https://www.oig.dol.gov/public/reports/oa/2022/19-22-006-03-315.pdf
Page 14 of 30
U.S. Department of Labor – Office of Inspector General
recent UI alert memorandum shared our concerns about gender and racial inequality in
UI benefit payments as well as the need for protection of claimants’ biometric data.
The following section, while detailing impactful results, also describes our overall
significant concern and related elements as follows: reducing improper payments and
combatting large-scale fraud.
DEPLOYING UI BENEFITS EXPEDITIOUSLY AND EFFICIENTLY
In our CARES Act UI report issued May 28, 2021, we found DOL’s guidance and
oversight was lacking. 29 DOL did not ensure the states: implemented the programs and
paid benefits promptly; performed required and recommended improper payment
detection and recovery activities; and reported accurate and complete program
activities. This occurred primarily because states’ IT systems were not modernized,
staffing resources were insufficient to manage the increased number of new claims,
and, according to state officials, guidance from ETA was untimely and unclear. Thus,
the significant weaknesses in state preparedness continued to hamper pandemic
response.
During Phase 3, we began to evaluate the causes of states’ struggles to implement the
CARES Act UI programs. ETA officials reported states faced the combined challenges
of (1) managing and processing an unprecedented increase in claims at an
unprecedented pace, (2) making the statutory changes to existing UI programs, and
(3) implementing the three key CARES Act UI programs. In addition, states had to
develop new systems to implement the new programs that resulted in backlogs in
processing claims for weeks, and, in some cases, months.
In our September 2022 report, we found ETA and states did not ensure
pandemic-related UI funds were paid only to eligible individuals promptly. 30 Highlighting
the importance of proper planning and oversight, four states paid more improperly than
the total amount typically paid for the entire UI program. We estimated that, in the initial
6 months after the CARES Act passed, 4 states paid $30.4 billion in PUA and Federal
Pandemic Unemployment Compensation benefits improperly, including $9.9 billion paid
to likely fraudsters.
We found that ETA gave states guidance on improper payments for pandemic-related
UI programs in May 2020. However, ETA and states need to be better prepared ahead
of unexpected events. ETA stated that it typically takes up to 4 years to launch new UI
programs, but emergency situations require quicker action. 31 ETA and states need to
29
COVID-19: States Struggled to Implement CARES Act Unemployment Insurance Programs,
Report No. 19-21-004-03-315 (May 28, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-315.pdf
30
COVID-19: ETA and States Did Not Protect Pandemic-Related UI Funds from Improper Payments
including Fraud or from Payment Delays, Report No. 19-22-006-03-315 (September 30, 2022), available
at: https://www.oig.dol.gov/public/reports/oa/2022/19-22-006-03-315.pdf
31
Semiannual Report to Congress, Volume 87, October 1, 2021-March 31, 2021, available at:
https://www.oig.dol.gov/public/semiannuals/87.pdf
Page 15 of 30
U.S. Department of Labor – Office of Inspector General
include risk planning to create new programs quickly and prevent improper payments.
This planning should include developing guidance and an oversight framework to
ensure states’ eligibility procedures and Benefit Payment Control operations continue to
function during emergencies.
REDUCING IMPROPER PAYMENTS
For over 20 years, the OIG has reported on the Department’s
limited ability to measure, report, and reduce improper payments
in the UI program, which has experienced some of the highest
improper payment rates across the federal government. 32 The
reported improper payment rate estimate for the regular UI
program has been above 10 percent for 16 of the last
19 years. 33 For 2021 and 2022, ETA has estimated an improper
payment rate of 18.71 percent and 21.52 percent, respectively.
Our recommendations have specifically included the need for
the Department to estimate improper payments within federally
funded temporary emergency programs. In August 2020, we
recommended ETA estimate the improper payment rate 34 for
pandemic-related UI programs. In December 2021, consistent
with our recommendation, ETA reported an improper payment
rate estimate that ETA applied to two of three key pandemic UI
programs, Pandemic Emergency Unemployment Compensation
and Federal Pandemic Unemployment Compensation.
Additionally, in December 2022, ETA reported an improper
payment rate estimate of 21.52 percent, which it also applied to Pandemic Emergency
Unemployment Compensation and Federal Pandemic Unemployment Compensation. 35
32
Fraud is a type of improper payment. The Office of Management and Budget explains that, at a high
level, a payment is “improper” if made in an incorrect amount or to the wrong recipient. Improper
payments can result in a money loss that was either unintentional (accidental) or intentional (fraud). Office
of Management and Budget, “Transmittal of Appendix C to OMB Circular A-123, Requirements for
Payment Integrity Improvement,” Memorandum (March 5, 2021), last accessed September 27, 2022,
available at: https://www.whitehouse.gov/wp-content/uploads/2021/03/M-21-19.pdf
33
UI improper payments data for FY 2004 through FY 2022 as reported on PaymentAccuracy.gov
34
COVID-19: More Can Be Done to Mitigate Risk to Unemployment Compensation under the CARES
Act, Report No. 19-20-008-03-315 (August 07, 2020), available at:
https://www.oig.dol.gov/public/reports/oa/2020/19-20-008-03-315.pdf
35
In FY 2022, the Department found the PUA, Pandemic Emergency Unemployment Compensation, and
Federal Pandemic Unemployment Compensation programs to be susceptible to significant improper
payments. The Office of Management and Budget Memorandum M-21-19 requires the Department to
produce an improper payment and unknown payment rate in the fiscal year following the fiscal year in
which the risk assessment determination was made. In the Agency Financial Report, the Department
stated FY 2022 is anticipated to be the last year reporting on these programs as they expired on
September 6, 2021. ETA’s reported improper payment rate estimate of 21.52 percent does not include
the PUA program. However, it is the most current improper payment rate from ETA and PUA had
significant control weaknesses that indicate the program will have a comparable or greater improper
payment rate.
Page 16 of 30
U.S. Department of Labor – Office of Inspector General
In Congressional testimony in February 2023, 36 we reported updated information based
on two primary changes: (1) ETA released its annual improper payment rate estimate
for FY 2022 and (2) ETA has recently provided a total for pandemic UI spending. 37
While that expenditure information is likely to be updated, these changes enabled us to
report on actual expenditures rather than on estimated funding. With those updates,
more than $888 billion in total federal and state UI benefits were paid for benefit weeks
during the UI pandemic period. 38
Applying the estimated 21.52 percent improper payment rate to the approximate
$888 billion in pandemic UI expenditures, at least $191 billion in pandemic UI payments
could have been improper payments, with a significant portion attributable to fraud.
Further, for Program Year 2021, ETA estimated a fraud rate of 8.57 percent, 39 which
indicates over $76 billion was likely paid to fraudsters. Based on our audit and
investigative work, the improper payment rate for pandemic-related UI payments was
likely higher than 21.52 percent.
For example, ETA’s reported improper payment rate estimates have not included the
PUA program. ETA stated it would report the estimated improper payment rate for PUA
in 2022. However, after reviewing DOL’s sampling and estimation methodology plan,
the Office of Management and Budget requested DOL conduct further analysis of the
outcomes before producing an estimate of improper payments. As of June 9, 2023, the
Department has not yet reported the PUA improper payment rate.
Estimating the improper payment rate for all emergency UI programs is critical for the
efficient operation of the program. ETA and the states, under their program operating
responsibilities, must determine the improper payment rate, including the fraud rate, for
pandemic UI programs.
36
“The Greatest Theft of American Tax Dollars: Unchecked Unemployment Fraud,” Hearing, Statement
for the Record of Larry D. Turner, Inspector General, U.S. Department of Labor; House Committee on
Ways and Means (February 8, 2023), available at: https://www.oig.dol.gov/public/testimony/02082023.pdf
37
According to ETA, the data provided reflects CARES Act UI program activity through January 23, 2023,
with the exception of the Temporary Full Federal Funding of the First Week of Compensable Regular
Unemployment for States with No Waiting Week program, which is through December 31, 2022; data
provided regarding the regular UI, Unemployment Compensation for Federal Employees, and
Unemployment Compensation for Ex-Servicemembers programs reflect the monthly totals from
April 2020 through September 2021.
38
With the exception of PUA, for which claims could be backdated to January 27, 2020, we define the UI
pandemic period as March 27, 2020, through September 6, 2021. We also note that, according to ETA, it
cannot provide final total costs of the programs because states are still processing claims that were for
weeks of unemployment prior to expiration of the programs.
39
ETA estimated the fraud rate as part of their Benefit Accuracy Measurement system reporting for the
program year July 1, 2020, through June 30, 2021. The Benefit Accuracy Measurement system is
designed to determine the accuracy of paid and denied claims in three major UI programs: regular State
UI, Unemployment Compensation for Federal Employees, and Unemployment Compensation for
Ex-Servicemembers. The fraud rate for 2022 will likely be published in October 2023.
Page 17 of 30
U.S. Department of Labor – Office of Inspector General
We have also identified issues with the UI program through our financial reporting. We
reported in August 2021 that, while DOL had complied with the Payment Integrity
Information Act of 2019 40 for FY 2020, it reported UI information for only 8 percent of
total program year expenses. 41 ETA received approval from the Office of Management
and Budget to exclude the fourth quarter as well as CARES Act expenditures. However,
this exclusion of about $259 billion ($195 billion in CARES Act UI and $64.3 billion in
regular UI) meant that ETA’s reported estimated improper payment rate of 9.17 percent
was not reflective of total program year expenses but only of $22.6 billion or 8 percent
of $281.9 billion (see Figure 5).
Figure 5: UI Benefits Included and Excluded from 2020 Improper Payment Rate
Further, in July 2022, we reported that DOL did not meet requirements for compliance
with the Payment Integrity Information Act of 2019 for FY 2021. While DOL met three of
the six compliance requirements for UI programs, we found DOL did not meet the other
three requirements: it did not publish all improper payment estimates, did not
demonstrate improvement from the improper target rate published in FY 2020, and did
not report an improper payment rate of less than 10 percent. The OIG has long
40
The Payment Integrity Information Act of 2019 requires federal agencies to identify programs
susceptible to significant improper payments, estimate the improper payments for those programs, and
report on actions to reduce the improper payments in those programs.
41
The U.S. Department of Labor Complied with the Payment Integrity Information Act for FY 2020, But
Reported Unemployment Insurance Information Did Not Represent Total Program Year Expenses,
Report No. 22-21-007-13-001 (August 6, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/22-21-007-13-001.pdf
Page 18 of 30
U.S. Department of Labor – Office of Inspector General
recommended 42 ETA develop and implement a valid and reliable method for estimating
the improper payment rate for federally-funded emergency programs, including
temporary programs.
Again, in June 2023, we reported 43 that DOL did not meet requirements for compliance
with the Payment Integrity Information Act of 2019 for FY 2022. While DOL met four of
the six compliance requirements for UI excluding PUA, it did not meet the other two: it
did not demonstrate improvement from the improper target rate published in FY 2021,
and it did not report an improper payment rate of less than 10 percent. For PUA, we
reported DOL did not meet four of the six compliance requirements for the PUA
program: it did not publish improper payment estimates, programmatic corrective action
plans, reduction targets, and an improper payment rate.
We also identified incomplete reporting and incomplete UI program information, which
resulted in a second consecutive qualified opinion on DOL’s financial statements. In
August 2022, we issued an alert memorandum 44 about deficient reporting by states
regarding the CARES Act UI program. Our examination of required reports identified
that some states did not submit reports to ETA or reported zero activity. For instance,
seven states reported zero overpayments for the PUA program. This lack of accurate
state performance information hinders Congress and ETA’s ability to: assess state
activities, mitigate overpayment risks, identify program weaknesses, and improve future
temporary programs.
In December 2022, for the second straight year, we issued 45 the Department a qualified
opinion on its consolidated financial statements and reported one material weakness
related to pandemic-related UI funding. There were two primary causes for this issue:
(1) the Department was unable to support $7.9 billion it estimated in remaining
pandemic-related UI claims in appeal or unprocessed as of September 30, 2022, and
(2) the Department was unable to support the $3.5 billion it estimated in remaining
pandemic-related UI benefit overpayment receivables.
COMBATTING LARGE-SCALE UI FRAUD
During the first two phases, the OIG focused our resources to identify and investigate
fraud either against or within Department programs that had the greatest vulnerability
42
For example, see: Recovery Act: ETA Is Missing Opportunities to Detect and Collect Billions of Dollars
in Overpayments Pertaining to Federally-Funded Emergency Benefits, Report No. 18-12-001-03-315
(January 31, 2012), available at: https://www.oig.dol.gov/public/reports/oa/2012/18-12-001-03-315.pdf
43
The U.S. Department of Labor Did Not Meet the Requirements for Compliance with the Payment
Integrity Information Act for FY 2022, Report No. 22-23-006-13-001 (June 9, 2023), available at:
https://www.oig.dol.gov/public/reports/oa/2023/22-23-006-13-001.pdf
44
Alert Memorandum: The Employment and Training Administration Needs to Ensure State Workforce
Agencies Report Activities Related to CARES Act Unemployment Insurance Programs,
Report No. 19-22-004-03-315 (August 2, 2022), available at:
https://www.oig.dol.gov/public/reports/oa/2022/19-22-004-03-315.pdf
45
FY 2022 Independent Auditor’s Report on the DOL Financial Statements, Report No. 22-23-002-13-001
(December 13, 2022), available at: https://www.oig.dol.gov/public/reports/oa/2023/22-23-002-13-001.pdf
Page 19 of 30
U.S. Department of Labor – Office of Inspector General
for abuse, with a significant focus on large-scale identity theft-related unemployment
insurance fraud.
The scope of UI fraud in pandemic-related programs was unprecedented. With its
limited resources, the OIG expanded its reach by partnering with the U.S. Department
of Justice (DOJ) to create the National UI Fraud Task Force. Our partners on the task
force are the: Federal Bureau of Investigation, U.S. Secret Service, U.S. Postal
Inspection Service, Homeland Security Investigations, Internal Revenue
Service-Criminal Investigation Division, U.S. Social Security Administration-OIG, and
U.S. Department of Homeland Security-OIG. The National UI Fraud Task Force
continues to focus on intelligence sharing, deconfliction, joint national messaging, and
effective use of investigative and prosecutorial resources.
We also collaborated with DOJ on the strategic assignment of 12 term-appointed
Assistant United States Attorneys assigned solely to prosecute UI fraud; helped
establish a multi-disciplinary Pandemic Rapid Response team within the OIG; appointed
a national UI fraud coordinator to manage our national investigative response to UI
fraud; and appointed seven regional UI fraud coordinators to partner with the SWAs and
federal, state, and local law enforcement on UI fraud matters in their geographic areas
of responsibility.
Further, we created and coordinated the release of various public and law enforcement
sensitive messages to alert and aid stakeholders in detecting and preventing fraud.
These messages included a UI Fraud Consumer Protection Guide, 46 UI Fraud
Investigations Guide, fraud alerts for state/local law enforcement organizations, bilingual
alerts regarding UI fraud, phishing, and identity theft, 47 and a joint OIG / U.S. Secret
Service alert on the detection and mitigation of UI fraud for financial institutions. The
OIG has also done extensive outreach to educate and raise awareness regarding fraud
trends, best practices, red flags, and more. Our special agents conveyed critical
information on UI fraud investigations and data analytics to many organizations during
the pandemic. 48
In several alert memoranda, we highlighted additional urgent program vulnerabilities to
the Department. In an alert memorandum on June 16, 2021, we outlined how disclosure
46
DOJ, National Unemployment Insurance Fraud Task Force, Unemployment Insurance Fraud Consumer
Protection Guide (September 21, 2020), available at:
https://www.oig.dol.gov/public/Unemployment%20Insurance%20Fraud%20Consumer%20Protection%20
Guide%2C%20Final.pdf
47
Our Pandemic Response Portal features bilingual fraud alerts and much more and is available at:
https://www.oig.dol.gov/OIG_Pandemic_Response_Portal.htm.
48
Including the National Association of Attorney’s General, the Pandemic Response Accountability
Committee, the Council of Inspectors General on Integrity and Efficiency, the American Bankers
Association, the Independent Community Bankers of America, the Federal Bureau of Investigation, DOL’s
Office of Unemployment Insurance, and the SWAs
Page 20 of 30
U.S. Department of Labor – Office of Inspector General
limitations regarding UI data 49 contradicted the Inspector General Act of 1978, as
amended. 50 To obtain access to UI data, the OIG had to issue two separate sets of
Inspector General subpoenas. The resulting delays equated to the lack of detection and
prevention of billions of dollars in potentially fraudulent claims at the earliest opportunity.
ETA has required sharing of state UI data as a condition of the fraud prevention grants
offered under ARPA, which would provide such access through 2025. However, all
states would need to receive such grants to provide the necessary access.
In a July 2021 alert memorandum, we reported ETA did not require the National
Association of State Workforce Agencies (NASWA) to share suspected UI fraud data
with ETA or with the OIG 51 as required by the Department. We noted that NASWA
reporting flagged UI data as required would assist the OIG to effectively and efficiently
detect and investigate large-scale fraud and identify and share fraud trends with ETA
and the SWAs. NASWA started providing the OIG with flagged data in early 2023.
Finally, in March 2023, we issued an alert memorandum 52 about the identity verification
service contractors that states hired to combat imposter claims being filed with stolen or
synthetic 53 identities. Approximately 45 percent of states hired contractors that used
facial recognition technology, which has a demonstrated racial and gender bias.
Furthermore, some states did not implement necessary privacy security measures to
protect UI claimant’s biometric data, based on recommendations by the National
Strategy for Trusted Identities in Cyberspace. Less than a month after our report issued,
ETA provided additional guidance to states regarding biometrics and facial recognition.
As of April 2023, the OIG has opened over 200,000 investigative matters related to the
pandemic. The vast majority of these matters involve identify theft-related UI fraud. We
have leveraged technology to automate the processing of complaints from DOJ’s
National Center for Disaster Fraud so that they are directly ingested into our case
management system. This process allows us to provide victim resource information to
potential victims while also allowing for deconfliction with other federal law enforcement
agencies to avoid duplication of efforts.
49
Alert Memorandum: The Employment and Training Administration Needs to Issue Guidance to Ensure
State Workforce Agencies Provide Requested Unemployment Insurance Data to the Office of Inspector
General, Report No. 19-21-005-03-315 (June 16, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-005-03-315.pdf
50
Public Law 95-452—October 12, 1978, 92 Stat. 1101, as amended; text of the Inspector General Act of
1978, as amended, is available at: https://www.ignet.gov/sites/default/files/files/igactasof1010(1).pdf
51
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 No. 19-21-006-03-315 (July 1, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-006-03-315.pdf
52
Alert Memorandum: ETA and States Need to Ensure the Use of Identity Verification Service
Contractors Results in Equitable Access to UI Benefits and Secure Biometric Data,
Report No. 19-23-005-03-315 (March 31, 2023), available at:
https://www.oig.dol.gov/public/reports/oa/2023/19-23-005-03-315.pdf
53
A synthetic identity is a false identity created from a combination of real and fake information.
Page 21 of 30
U.S. Department of Labor – Office of Inspector General
We have significantly expanded the size of our hotline staff to process both hotline and
National Center for Disaster Fraud complaints. Matters that meet guidelines for federal
prosecution are referred to our field offices or to our federal law enforcement partners
for further investigation. Matters that do not meet federal prosecution guidelines are
referred back to SWAs for action. However, subject to resource availability, this hotline
staff expansion may need to be eliminated.
In addition, our special agents prioritized their case inventory so that approximately
96 percent of the investigative workload was focused on UI fraud. Prior to the pandemic,
UI fraud made up approximately 11 percent of the investigative workload.
We have also further developed our partnerships. We are an integral member of DOJ’s
COVID-19 Fraud Enforcement Task Force, which seeks to use every available federal
tool—including criminal, civil, and administrative actions—to combat and prevent
COVID-19 related fraud. We have also dedicated full-time staff to serve on DOJ’s
COVID-19 Fraud Strike Force teams, which are located across the country. These
teams use data analytics to turn raw data into actionable leads to prosecute organized
criminal groups and networks of overseas fraudsters who stole pandemic UI benefits.
From April 1, 2020, through April 30, 2023, the OIG’s investigative efforts have resulted
in over 1,350 UI indictments/initial charges with over 720 convictions and monetary
results in excess of $930 million (see Figure 6).
Figure 6: UI Indictments/Initial Charges through April 30, 2023
Page 22 of 30
U.S. Department of Labor – Office of Inspector General
WORKER BENEFIT PROGRAMS: WORKERS’
COMPENSATION
Preparedness and a focus on the future is also vital when it comes to healthcare. As
part of our Phase 3 work, we supported a Pandemic Response Accountability
Committee effort by examining the use of telehealth during the pandemic. 54 Specifically,
we evaluated telehealth services provided by three workers’ compensation programs,
including the Federal Employees’ Compensation Act program. As a result of the
pandemic, these three programs instituted new policies that expanded access to
telehealth for injured workers by allowing routine medical care to be provided through
telehealth by certain types of medical care practitioners. 55
All three workers’ compensation programs experienced dramatic increases in the use of
telehealth during the first year of the pandemic compared to the prior year—with the
Office of Workers’ Compensation Programs paying more than $7 million for 34 times
more telehealth services. Claimants in the Federal Employees’ Compensation Act
program used approximately 95 percent of these services. The Office of Workers’
Compensation Programs identified several program integrity risks, such as providers
billing for services that were not rendered or were unnecessary. While expansion of
telehealth can be used to provide care when in-person care is not readily accessible,
programs must ensure appropriate safeguards to protect against fraud, waste, and
abuse.
ADDITIONAL FINDING RELATED TO WORKERS’ COMPENSATION
• The pandemic caused delays in processing Federal Employees’ Compensation
Act claims, resulting in a decrease of 15 percent in timely claims’
adjudications. 56
WORKER SAFETY AND HEALTH AND
WORKPLACE RIGHTS
Safeguarding mission critical U.S. workers is vital during emergencies. For example, our
initial report on OSHA’s efforts to protect the safety of the nation’s workforce addressed
the impact the pandemic had on operations including the number and types of
inspections and the agency’s alternative approaches to safeguard its own workers, such
54
Insights on Telehealth Use and Program Integrity Risks in DOL Workers’ Compensation Programs
during the Pandemic, Report No. 19-23-002-04-001 (December 13, 2022), available at:
https://www.oig.dol.gov/public/reports/oa/2023/19-23-002-04-001.pdf
55
Prior to the pandemic, only the Federal Employees’ Compensation Act program allowed telehealth.
Although telehealth was not specifically authorized prior to the pandemic, the energy program paid for the
services if appropriate for the medical condition. The black lung benefits program did not provide
telehealth as an allowable service.
56
COVID-19: Pandemic Causes Delays in FECA Claims Adjudication, Report No. 19-21-007-04-431
(September 23, 2021), available at: https://www.oig.dol.gov/public/reports/oa/2021/19-21-007-04-431.pdf
Page 23 of 30
U.S. Department of Labor – Office of Inspector General
as remote inspections conducted by telephone or email. This OSHA audit found that
increased complaints, reduced inspections, and the degree of remote inspections
conducted subjected the nation’s workforce to increased safety risks. 57 As a result of
our audit, and per President Biden’s January 21, 2021, Executive Order on Protecting
Worker Health and Safety, OSHA improved its inspection strategy by prioritizing
high-risk employers for COVID-19-related onsite inspections through issuance of: a
National Emphasis Program, tracking onsite versus remote inspections; and a
healthcare Emergency Temporary Standard.
In our Phase 3 work, we found that, to better protect workers, OSHA could leverage
inspection collaboration opportunities with external federal agencies. From the onset of
the pandemic, OSHA received a sudden influx of complaints. However, to reduce
person to-person contact and to prevent the spread of COVID-19, the agency
decreased the number of its inspections, particularly those conducted onsite. Despite
receiving 15 percent more complaints in 2020 than in 2019, OSHA conducted
50 percent fewer inspections. This meant leaving employees vulnerable to COVID-19
as a workplace hazard. OSHA engaged with some federal agencies. However, by not
identifying federal partners in a position to assist during a large-scale safety and health
crisis and by not having or creating collaborative agreements with those partners,
OSHA lost a valuable opportunity to better protect U.S. workers. 58
Similarly, we found OSHA lacks complete information on COVID-19 infection rates at
worksites. OSHA only requires employers to report a work-related fatality, inpatient
hospitalization, amputation, or loss of an eye. It is up to employers to determine if an
injury or illness is work-related, which is generally far simpler in an amputation case
than in the case of an airborne illness. However, COVID-19 is spreadable regardless of
the origin of infections; 59 no matter where an employee contracted the virus, COVID-19
cases in the worksite endanger workers. Requiring employers to notify all employees of
positive cases at the worksite is necessary to ensure safe and healthful working
conditions. OSHA stated that fixing this issue will require significant regulatory changes
and investment in public and occupational health infrastructure, as well as better data
collection and analysis capabilities across a range of other government agencies.
We also found OSHA closed inspections without ensuring it received and reviewed all
items requested from employers to demonstrate alleged COVID-19 health hazards had
been mitigated. Due to the lack of citations, incomplete information on infection rates at
worksites, and insufficient evidence of hazard mitigation, there was a heightened risk
that workers suffered unnecessary exposure to the virus.
57
COVID-19: Increased Worksite Complaints and Reduced OSHA Inspections Leave U.S. Workers’
Safety at Increased Risk, Report No. 19-21-003-10-105 (February 25, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-003-10-105.pdf
58
COVID-19: To Protect Mission Critical Workers, OSHA Could Leverage Inspection Collaboration
Opportunities with External Federal Agencies, Report No. 19-22-003-10-105 (March 31, 2022), available
at: https://www.oig.dol.gov/public/reports/oa/2022/19-22-003-10-105.pdf
59
COVID-19: OSHA’s Enforcement Activities Did Not Sufficiently Protect Workers from Pandemic Health
Hazards, Report No. 19-23-001-10-105 (October 31, 2022), available at:
https://www.oig.dol.gov/public/reports/oa/2023/19-23-001-10-105.pdf
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U.S. Department of Labor – Office of Inspector General
To protect workers from pandemic health hazards, OSHA’s enforcement activities can
be improved (see Figure 7).
Figure 7: OSHA’s Enforcement Activities Can Be Improved
ADDITIONAL FINDINGS RELATED TO WORKER SAFETY AND HEALTH AND
WORKPLACE RIGHTS
• The pandemic significantly increased the number of whistleblower complaints
that OSHA received. 60
• The Mine Safety and Health Administration faced challenges and needed to do
more to ensure the safety of its workforce and the mining industry. 61
• The Wage and Hour Division acted quickly 62 after Families First Coronavirus
Response Act passage but had continued enforcement challenges. 63
60
COVID-19: OSHA Needs to Improve Its Handling of Whistleblower Complaints during the Pandemic,
Report No. 19-20-010-10-105 (August 14, 2020), available at:
https://www.oig.dol.gov/public/reports/oa/2020/19-20-010-10-105.pdf
61
COVID-19: MSHA Faces Multiple Challenges in Responding to the Pandemic,
Report No. 19-20-006-06-001 (July 24, 2020), available at:
https://www.oig.dol.gov/public/reports/oa/2020/19-20-006-06-001.pdf
62
COVID-19: WHD Needs to Closely Monitor the Pandemic Impact on Its Operations,
Report No. 19-20-009-15-001 (August 7, 2020), available at:
https://www.oig.dol.gov/public/reports/oa/2020/19-20-009-15-001.pdf
63
COVID-19: The Pandemic Highlighted the Need to Strengthen Wage and Hour Division’s Enforcement
Controls, Report No. 19-21-008-15-001 (September 30, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-008-15-001.pdf
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U.S. Department of Labor – Office of Inspector General
EMPLOYMENT AND TRAINING
Emergency preparedness and response is vital when it comes to participants engaged
in employment and training programs. Our Phase 1 work assessed what actions
Job Corps had taken in response to challenges posed by the pandemic, including
suspension of operations from March to May 2020 and the subsequent transition to
remote learning. 64 We made recommendations focused on protecting the health of
students and staff currently at centers, ensuring both centers and remote students have
the necessary resources to engage in a virtual learning environment, and ensuring
centers have the proper controls in place to adhere to national safety guidance prior to
reopening their campuses. In November 2021, we reported the pandemic had a
significant impact on Job Corps’ efforts 65 to develop and implement protocols to safely
resume on-campus operations and provide effective remote instruction.
As of July 2021, Job Corps brought students and staff back to 112 centers, but
reviewed less than half of them for compliance with select safety requirements, such as
masking and physical barriers. In addition, more than 68 percent of Job Corps’ students
needed basic tools, including computers and internet access, for remote learning during
the pandemic. Partly as a result of these implementation issues, Job Corps’ student
enrollment fell 56 percent from March 2020 to April 2021, trades training completion
dropped to zero in the year leading to April 2021, and the average length of time it took
students to complete the program more than doubled from approximately 8 months to
18 months. Our Phase 3 work for employment and training programs continues.
ADDITIONAL FINDINGS RELATED TO EMPLOYMENT AND TRAINING
• ETA needed to improve its communication with grant recipients regarding the
time-limited flexibilities in Office of Management and Budget Memorandum
M-20-17. 66
• ETA had a significant delay in the length of time for Disaster Dislocated Worker
program grantees to provide disaster relief employment and training. 67
64
COVID-19: ETA Should Continue to Closely Monitor Impact on Job Corps Program,
Report No. 19-20-007-03-370 (July 28, 2020), available at:
https://www.oig.dol.gov/public/reports/oa/2020/19-20-007-03-370.pdf
65
COVID-19: Safety and Remote Learning Challenges Continue for Job Corps,
Report No. 19-22-001-03-370 (November 12, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2022/19-22-001-03-370.pdf
66
Alert Memorandum: ETA Needs to Improve Its Plans for Providing Administrative, Financial
Management, and Audit Requirements Relief to Grant Recipients Impacted by the Novel Coronavirus
(COVID-19), Report No. 19-20-003-03-001 (May 19, 2020), available at:
https://www.oig.dol.gov/public/reports/oa/2020/19-20-003-03-001.pdf
67
COVID-19: Delays in Providing Disaster Relief Jeopardize $366 Million Disaster Worker Grant
Program, Report No. 19-22-002-03-391 (January 28, 2022), available at:
https://www.oig.dol.gov/public/reports/oa/2022/19-22-002-03-391.pdf
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U.S. Department of Labor – Office of Inspector General
STATUS OF AUDIT RECOMMENDATIONS
Our pandemic-related audit reports have included 90 recommendations to the
Department. Recommendations are considered resolved when agency management
and the OIG agree on the required corrective actions. After the agreed-upon corrective
actions have been completed, the recommendations are considered closed. The
Department has addressed 81 percent of our recommendations: 33 are resolved and
40 are closed. However, 17 recommendations remain unresolved (see Figure 8).
Figure 8: Status of 90 COVID-19-Related Recommendations, as of June 9, 2023
50
45
40
15
35
30
25
20 19
2
15
10 6
1 3 4
5 11 2
4 6 6 6 5
0
ETA - Grants ETA - Job ETA - UI MSHA OSHA OWCP WHD
Corps
Closed Resolved Unresolved
More information on the status of OIG recommendations can be found at our
Recommendation Dashboard. 68
ONGOING AND PLANNED PANDEMIC RESPONSE OVERSIGHT WORK
PHASE 3: ONGOING AND PLANNED WORK
As we are completing our Phase 3 oversight work, the OIG has 24 ongoing and
10 planned audits focused on UI, job training, OSHA, the Mine Safety and Health
Administration, and Veterans Employment and Training Service programs. We also are
planning to complete as many UI fraud investigations as possible with the time
remaining on the statute of limitations.
Our Office of Audit Phase 3 work is listed as follows, with in-progress audits marked
with an asterisk (*).
68
Available at: https://www.oig.dol.gov/recommendationdashboard.htm
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U.S. Department of Labor – Office of Inspector General
ETA - Office of Unemployment Insurance:
1. ETA efforts to ensure UI program integrity*
2. DOL’s oversight of emergency UI administrative grants to states*
3. ETA and state efforts to detect and recover overpayments*
4. Adequacy of state IT resources*
5. Adequacy of state staffing resources*
6. Effectiveness of programs for nontraditional claimants*
7. Effectiveness of the Temporary Full Federal Funding program*
8. Effectiveness of the Short-Time Compensation program*
9. Effectiveness of the Mixed Earners Unemployment Compensation program*
10. Effectiveness of the Emergency Unemployment Relief for State and Local
Governmental Entities, Certain Non-Profit Organizations, and Federally
Recognized Indian Tribes program*
11. Pandemic Response Accountability Committee Case Study Project on federal
pandemic response funds in select geographic areas*
12. ETA and states’ efforts to address multistate claimants*
13. ETA and states’ efforts to address claimants using deceased persons’ social
security numbers*
14. ETA and states’ efforts to address claimants using prisoners’ social security
numbers*
15. ETA and states’ efforts to address claimants with suspicious email accounts*
16. Concerns over data warehousing and analytics to prevent UI fraud*
17. Impact of waivers on UI overpayments, fraud investigations, and recoveries*
18. Joint review with U.S. Small Business Administration-OIG*
19. Mandatory audit of DOL’s FY 2023 Compliance with the Payment Integrity
Information Act of 2019 69
20. DOL and states’ oversight of UI claimants return to work
21. ARPA Equity Grants
22. Office of UI Modernization’s efforts to improve SWAs’ UI IT systems
ETA - Job Training Programs:
1. COVID-19: Employment and training grantees and sub-recipients (New Jersey)*
2. COVID-19: Employment and training grantees and sub-recipients (Texas)*
3. COVID-19: Employment and training grantees and sub-recipients (other states
may be selected)
4. Job Corps: Ensuring funds were properly and efficiently used during COVID-19
pandemic
Occupational Safety and Health Administration:
1. Adequacy of plans and use of funds provided under ARPA*
69
A large portion of this annual audit focuses on UI.
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U.S. Department of Labor – Office of Inspector General
2. Review of actions taken to address increasing and severe injury at online
retailers’ warehouses*
3. Effectiveness of corrective actions taken in response to our initial report on
OSHA’s handling of whistleblower complaints
4. Adequacy of plans to prepare for future pandemics
Mine Safety and Health Administration:
1. Impact of COVID-19 on mandatory inspections*
2. Impact on the Mine Safety and Health Administration’s miner training
Veterans Employment and Training Services:
1. Effectiveness of homeless veterans’ reintegration and training programs
2. Impact of Veterans Employment and Training Services jobs for veterans’ state
grants training program
Our Office of Investigation work includes:
1. Continuing to coordinate with the OIG’s Office of Audit on any systemic
weaknesses or fraud vulnerabilities identified during COVID-19 audits and
investigations to reduce the long-term impact of fraud on DOL programs;
2. Continuing to process and evaluate UI fraud complaints to identify large-scale
fraud matters for further investigation;
3. Highlighting successful COVID-19 investigations by issuing DOL/DOJ press
releases in coordination with investigative partners;
4. Advising DOL regulatory agencies/program experts of audit and investigative
findings and possible weaknesses in the various programs to prevent future
fraud; and
5. Continuing to seek real-time direct access to UI and wage data, which is vital to
ensuring that the OIG can quickly identify fraud and share emerging fraud trends
with our state workforce partners and prevent fraud before it occurs.
PHASE 4: PLANNED WORK
Subject to resource limitations, we plan to begin our Phase 4 work as we are wrapping
up our Phase 3 work. We estimate our audit work completing by September 2025 and
our investigative work continuing to at least September 2026. For audit, our
Phase 4 work plans include reporting on lessons learned for UI, worker safety and
health, and employment training and recovery from the overall toll on workers since
COVID-19 first appeared in the United States. This phase will also include after-the-fact
assessments of pandemic program results, including for other DOL programs. As we
focus on the future in Phase 4, our oversight will include these lessons learned to assist
DOL in improving its programs and operations for future emergencies.
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U.S. Department of Labor – Office of Inspector General
Our Office of Investigations plans include:
1. OIG will continue to evaluate ongoing, long-term, complex criminal investigations
with an emphasis on UI fraud schemes:
• Allocate resources to high-impact multistate fraud schemes;
• Prioritize the most significant investigations and dedicate appropriate
resources and expertise to those investigations; and
• Determine if new fraud schemes emerged as a result of additional
COVID-19 funding and will notify DOL program agencies about those new
schemes.
2. Upon the conclusion of high-impact investigations, OIG will:
• Relay significant concerns, programmatic weaknesses, and lessons
learned via investigative notices to the Department;
• Make legislative recommendations related to vulnerabilities discovered
during investigations as a result of the COVID-19 funding;
• Evaluate the initial investigative response, case results, and final
outcomes;
• Identify significant OIG and program challenges encountered and
determine future initiatives based on investigative findings; and
• Consider establishing new policies and procedures or revising existing
policies to more efficiently meet the OIG investigative mission.
More information concerning our pandemic-focused UI work can be found at the UI
oversight section of our website. 70
70
For specific information on our oversight of the unemployment insurance program, please visit that
section of our website, available at: https://www.oig.dol.gov/doloiguioversightwork.htm.
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