Memorandum For: Brent Parton

Source document: Memorandum For: Brent Parton; document type: Government memorandum (DOL-OIG Alert Memorandum), filed as litigation exhibit.

Full text

Exhibit B
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U.S. Department of Labor
Office of Inspector General

Washington, D.C. 20210

Working for America’s Workforce
September 21, 2022

MEMORANDUM FOR:
BRENT PARTON

Acting Assistant Secretary
  for Employment and Training

FROM:

CAROLYN R. HANTZ
Assistant Inspector General
  for Audit

SUBJECT:
Alert Memorandum: Potentially Fraudulent
Unemployment Insurance Payments in
High-Risk Areas Increased to $45.6 Billion

Report Number: 19-22-005-03-315

The purpose of this memorandum is to alert you to concerns the Office of
Inspector General (OIG) has determined needs immediate action. In
February1 and June2 2021, the OIG issued alert memoranda to the Employment
and Training Administration (ETA) that cumulatively identified more than
$16 billion3 in potentially fraudulent unemployment insurance (UI) pandemic
benefits paid in four specific high-risk areas, to individuals with Social Security
numbers: (1) filed in multiple states, (2) of deceased persons, (3) used to file
UI claims with suspicious email accounts, and (4) of federal prisoners. Since
then, the OIG has identified an increase of $29.6 billion in potentially fraudulent

1 Alert Memorandum: The Employment and Training Administration (ETA) Needs to Ensure State
Workforce Agencies (SWA) Implement Effective Unemployment Insurance Program Fraud
Controls for High Risk Areas, Report No. 19-21-002-03-315 (February 22, 2021), available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-002-03-315.pdf
2 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
3 The two alert memoranda to ETA identified a cumulative total of nearly $17 billion, including
about $915 million in potential fraud that was identified under more than one area, resulting in
more than $16 billion paid in potentially fraudulent UI benefits.
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payments within three of the areas4 previously analyzed, raising the cumulative
total for these high-risk areas to $45.6 billion.5

The total potential fraud covers the period of March 2020 to April 2022.
In 2021, the OIG shared with ETA the data and methodology used to identify
potential fraud as well as recommended ETA take corrective actions and
implement controls that would help mitigate and prevent fraud from occurring
within the high-risk areas of the UI program. Specifically, in February 2021, the
OIG recommended ETA: (1) establish effective controls, in collaboration with
State Workforce Agencies (SWA or state), to mitigate fraud and other improper
payments to ineligible claimants; and (2) work with Congress to establish
legislation requiring SWAs to cross-match high-risk areas. As of the date of this
alert memorandum, ETA has not taken sufficient action to implement these
recommendations.

ETA’s lack of sufficient action significantly increases the risk of even more
UI payments to ineligible claimants. Our identification of the additional potentially
fraudulent payments emphasizes the need for increased ETA engagement and
assistance to mitigate fraud and protect the UI program’s integrity.

Despite the OIG’s continued efforts to identify potentially fraudulent payments to
ineligible claimants, we continue to experience delays in obtaining the needed UI
data. These delays impede our ability to perform our statutory duty to effectively
and timely conduct audits and investigations of the UI program. The Department
of Labor’s (DOL or the Department) reading of applicable federal regulations,
which ETA has adopted, contributes to the delays. Specifically, the Department
interprets regulations at 20 Code of Federal Regulations (C.F.R.) Part 603 as
prohibiting ETA from informing SWAs they are required to provide UI data to the
OIG for both audit and investigative purposes. Under the Coronavirus Aid, Relief,
and Economic Security (CARES) Act and the American Rescue Plan Act of 2021
(ARPA), ETA issued guidance providing for both audit and investigative access,
but only on a temporary basis.6 This interpretation and subsequent guidance to

4 For this current alert memorandum and analysis, the OIG did not have access to the
Department of Justice’s Bureau of Prisons (BOP) data to determine the increase in potentially
fraudulent payments. Therefore, the $45.6 billion only includes the BOP amount reported in the
June 2021 alert memorandum.
5 This $45.6 billion is comprised of benefits paid to claimants from March 2020 through
April 2022, in accordance with the Coronavirus Aid, Relief, and Economic Security Act, American
Rescue Plan Act of 2021, and Consolidated Appropriations Act, 2021.
6 UIPL No. 04-17, Change 1, Requirement for States to Refer Allegations of Unemployment
Compensation (UC) Fraud, Waste, Abuse, Mismanagement, or Misconduct to the Department of
Labor’s (Department) Office of Inspector General’s (DOL-OIG) and to Disclose Information
Related to the Coronavirus Aid, Relief, and Economic Security (CARES) Act to DOL-OIG for
Purposes of UC Fraud Investigation and Audits, issued August 3, 2021; UIPL No. 22-21, Grant
Opportunity to Support States with Fraud Detection and Prevention, Including Identity Verification
and Overpayment Recovery Activities, in All Unemployment Compensation (UC) Programs,
issued August 11, 2021.
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SWAs contradict the Inspector General Act of 1978, as amended (IG Act),
§ 6(a)(1) and § 6(a)(3), which authorizes mandatory OIG access to DOL grantee
information, including state UI data.

In our June 2021 alert memorandum, we recommended ETA amend
20 C.F.R. § 603.5 and § 603.6(a) through the rulemaking process to reinforce
that state UI information must be provided to the OIG for all Inspector General
engagements authorized under the IG Act, including audits, evaluations, and
investigations. ETA implemented a temporary solution.

In August 2021, ETA issued Unemployment Insurance Program Letter (UIPL)
No. 04-17, Change 1, requiring states to disclose UI data to the OIG for audits
and investigations during the pandemic period.7 ETA also awarded fraud
prevention grants to states conditioned on requiring OIG access to their UI data
for audit and investigative purposes through December 31, 2023.8 However,
ETA’s actions were not sufficient to resolve the OIG’s concerns regarding
unimpeded access to SWA UI data.

In response to our recommendation, ETA informed us it is considering
comprehensive updates to 20 C.F.R. Part 603. Although we met with ETA
numerous times and requested a written plan with projected timelines, none was
provided until July 2022, more than one year after we made the
recommendation. The Department estimates the projected effective date of the
updated regulations will be in February 2025, creating a 14-month gap from the
December 31, 2023, expiration of the grants that temporarily expanded OIG
access.9 During this 14-month period, the OIG’s access to state UI data will
again be impeded, in violation of the IG Act.

Although ETA stated it is exploring options for interim solutions to close the gap,
the lack of timely, affirmative plans prevents us from ensuring the continued
availability of data critical to identifying additional fraudulent UI benefit payments.
ETA needs to amend its regulations and immediately issue guidance to notify
states of the OIG’s authority to access information for both audits and
investigations without interruption or impediment.10 While ETA issued guidance
to states on September 15, 2022, asserting the OIG’s authority to access state

7 UIPL No. 04-17, Change 1, defined the pandemic period as approximately from
January 27, 2020, to September 6, 2021.
8 See footnote 6.
9 UIPL No. 22-21, Grant Opportunity to Support States with Fraud Detection and Prevention,
Including Identity Verification and Overpayment Recovery Activities, in All Unemployment
Compensation (UC) Programs, issued August 11, 2021
10 The Supreme Court of the United States has upheld the Department’s authority to revise
interpretations of its own regulations in this manner—see Perez v. Mortg. Bankers Ass’n,
575 U.S. 92, 100 (2015)—as well as the principle that changes in interpretations are valid,
provided they are consistent with the underlying regulations. See Shalala v. Guernsey Mem’l
Hosp., 514 U.S. 87, 100–02 (1995).
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UI data, the guidance does not require states to provide the OIG with such
access. ETA has authority to reinterpret 20 C.F.R. Part 603 in order to facilitate
the OIG’s access during the 14-month period that 20 C.F.R. Part 603 is being
amended.11

Potentially Fraudulent UI Benefits Continue to Increase in High-Risk Areas

The OIG estimates a total of $872.5 billion in pandemic-related UI funding since
the COVID-19 pandemic began in March 2020.12 In our June 2021 alert
memorandum, the OIG utilized UI data from March 2020 to October 2020 to alert
ETA to more than $16 billion13 in potentially fraudulent UI pandemic benefits paid
in four specific high-risk areas, to individuals with Social Security numbers:
(1) filed in multiple states, (2) of deceased persons, (3) used to file UI claims with
suspicious email accounts, and (4) of federal prisoners.

In August 2021, the OIG issued another request for updated data to ETA and
SWAs via an OIG Form 202 request,14 and once received, analyzed data
covering pandemic benefits paid during the period of March 2020 through
April 2022. Our analysis identified a total of $45.6 billion15 paid in potentially
fraudulent UI benefits, with increases in three of the aforementioned four
high-risk areas (see Table 1). Those areas include payments to individuals with
Social Security numbers: (1) filed in multiple states, (2) of deceased persons, and
(3) used to file for UI claims with suspicious email accounts.

As previously stated, the OIG does not have current federal prisoner data. The
OIG requested updated prisoner information from the U.S. Department of
Justice, Federal Bureau of Prisons (BOP) for the pandemic period, but BOP
declined “due to the burden created on BOP’s resources and technological
platform, which BOP prioritized for BOP operational requirements.” However, we
and other federal OIGs are currently working with BOP to determine if their

11 This would be consistent with the Administrative Procedure Act and the plain language of the
regulations. Specifically, 20 C.F.R. § 603.5(i) and § 603.6(a) and 29 C.F.R. § 96.41, when read
consistently with one another and with the IG Act, require SWAs to disclose UI information for
audits, evaluations, and investigations.
12 Reported on the DOL OIG’s public-facing website at
https://www.oig.dol.gov/doloiguioversightwork.htm (last updated on June 13, 2022, at the time of
this memorandum’s issuance), and in the OIG’s Pandemic Response Oversight Plan (updated
March 21, 2022), which is available at:
https://www.oig.dol.gov/public/oaprojects/Updated%20Pandemic%20Response%20Oversight%2
0Plan%202022%20for%20Publication.pdf.
13 The $16 billion does not include about $915 million in potential fraud that was identified under
more than one area.
14 Form 202 is the Notification of OIG Requirement for DOL Electronic Information form used to
request recurring information from each SWA.
15 The OIG will share with ETA the data and methodology used to identify this potential fraud so
that ETA can share the methodology with the SWAs to assist with fraud mitigation and
identification.
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policies and procedures can be expanded to sharing data with other OIGs. As a
result of the lack of updated data, the total dollar amount for federal prisoners
remained the same from our previous analysis of prisoner data.

Table 1: High-Risk Data Comparison between June 2021 and
April 2022

High-Risk Area
Total Potential Fraud
Reported in June 202116
Total Potential Fraud
Reported through
April 2022
Multistate Claimants
$12,100,212,752
$28,967,047,154
Deceased Persons
$94,562,937
$139,483,136
Suspicious Emails
$3,595,842,652
$16,265,578,304
Federal Prisoners17
$267,382,013
$267,382,013
Total
$16,058,000,354
$45,639,490,607
Source: SWA data acquired, aggregated, and interpreted by the OIG Data Analytics team. Total
amounts do not include duplicates that were identified in one or more areas. The total duplicate
amount is $7,399,611,229, including duplicates identified from previous Federal Prisoner amount
reported in the June 2021 alert memorandum.

Multistate Claimants

According to the CARES Act, a claimant who worked in more than one state and
became unemployed due to COVID-19-related reasons can only collect
UI benefits in one state. The OIG reviewed UI pandemic benefits paid from
March 2020 to April 2022 to individuals with Social Security numbers filed in two
or more states, resulting in benefits collected from more than one state. This
analysis revealed individuals used a total of 991,793 Social Security numbers to
receive potentially fraudulent UI benefits totaling more than $28.9 billion.

Deceased Persons

We determined 205,766 Social Security numbers of deceased persons were
used to file claims for UI pandemic benefits. To identify potentially fraudulent
benefit payments, the OIG identified cases where benefit claims were submitted
after the date of death associated with certain Social Security numbers. Scrutiny

16 The total benefits amounts reported in this memorandum includes the total cumulative amount
reported in 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.
17 The OIG did not have access to BOP data to conduct additional analysis for this memorandum.
The amount remains the same as what we reported in the June 2021 alert memorandum.
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of the data identified $139.4 million in potentially fraudulent benefits paid to
claimants using these Social Security numbers.

Suspicious Email Accounts

We found potentially fraudulent UI benefits were paid to individuals using Social
Security numbers to file claims with suspicious email accounts. The OIG
identified several methods for using certain types of email accounts to aid in
suspected fraudulent UI claims. These particular account types enable users to
establish email addresses that can hide personal information, including the user’s
identity. The suspicious email addresses can also be used to apply for multiple
UI claims.

Email service providers that supplied accounts offering anonymity were used
extensively to file UI claims. In total, we determined 1,714,188 Social Security
numbers associated with suspicious email addresses were used to file for
$16.2 billion in UI benefits.

Federal Prisoners

As previously reported in the June 2021 alert memorandum, we found Social
Security numbers of potentially ineligible federal prisoners were used to file for
UI claims that paid out more than $267.3 million in UI benefits. ETA needs to
ensure SWAs implement controls that can cross-match federal prisoner UI data
to mitigate fraud. As previously mentioned, due to the OIG not having current
federal prisoner data, there is no updated data as of the issuance of this
memorandum.

The OIG Continues to Experience Delays in Obtaining UI Data from SWAs

Since the CARES Act was implemented in March 2020, we have worked to gain
timely access to SWA UI data in an effort to prevent and detect fraud, waste, and
abuse in the UI program. Through its endeavors, the OIG encountered numerous
issues, including: (1) SWAs not providing access for each request, until
subpoenas were issued to each SWA, (2) the OIG receiving data months after
the request, and (3) the OIG receiving unusable and incomplete data.

In addition, we encountered difficulties obtaining data after ETA issued guidance
directing SWAs to disclose UI data to the OIG. For example, some SWAs had
difficulty creating a data connection or encrypting data, and some SWA
management assumed the request was handled and did not follow up with their
technical staff. Figure 1 illustrates the timeline of OIG data requests via
subpoenas and via Form 202 to SWAs, as well as the responses from SWAs.

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Figure 1: Timeline of OIG Data Requests and Inspector General Subpoenas

Source: Based on OIG – Office of Investigations communication with ETA and SWA officials

As previously stated, upon eventual receipt of SWA data, we encountered
instances where data files were not in the requested format, were incomplete, or
were not the data required by the OIG. Each SWA also manages recurring data
submissions to the OIG differently, which poses a risk to the OIG when analyzing
UI data timely and accurately. Unfettered access to SWA UI data would help
mitigate the delays experienced by the OIG when requesting data and enable the
OIG to more efficiently conduct fieldwork and issue reports timely. Unfettered
access to UI data would also significantly reduce the time and resources that
SWAs expend on recurring data transfers to the OIG.

The Department’s Guidance Interpreting 20 C.F.R. § 603.5 and § 603.6 Is
Inconsistent with the Inspector General Act of 1978, as amended,18 and
with 29 C.F.R. 96.41

The Department’s guidance19 interpreting its unemployment compensation
program regulations20 is inconsistent with the IG Act to the extent it only affords
the OIG restricted access to UI data. The IG Act requires the OIG to have timely
access to all records related to programs it oversees. DOL’s UI disclosure

18 Inspector General Act of 1978, as amended, Pub. L. 95-452, 5 U.S.C. App. 3, § 2(2)-(3).
19 UIPL No. 04-17 is the primary source of this impermissible interpretation; however,
UIPL No. 04-17, Change 1, and UIPL No. 22-21 also interpret 20 C.F.R. Part 603 inconsistently
with the IG Act.
20 Federal-State Unemployment Compensation (UC) Program; Confidentiality and Disclosure of
State UC Information, 20 C.F.R. §603.5 and § 603.6 (2021)
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regulations require SWAs to disclose “all information necessary for the proper
administration of the UC program.”21 The OIG maintains disclosures for OIG
purposes (i.e., for audits, evaluations, and investigations) are mandatory.
Consequently, the Department must construe and apply its regulations22
consistently with the IG Act’s oversight mandate.23

The Department’s interpretation24 of this regulation prior to August 2021 only
required SWAs to disclose UI data to the OIG upon request when the OIG was
conducting an investigation into a particular instance of suspected UI fraud. In
subsequent guidance25 the Department interpreted the regulation consistently
with the IG Act, by requiring SWAs to provide the OIG ongoing, recurring access
to UI information for both investigations and audits. However, this new
interpretation was temporary, lasting initially only through the end of the
pandemic period (September 2021)26 and currently only until
December 31, 2023,27 when the period of performance for SWA fraud prevention
grants expires.

The Department’s interpretation of other 20 C.F.R. Part 603 provisions28 also
contradicts the subsequent guidance to SWAs29 as well as the IG Act and other
applicable regulations30 authorizing OIG unimpeded access to state UI data.
20 C.F.R. § 603.5(i) permits SWAs to disclose confidential UI information “to a
federal official for purposes of UC program oversight and audits.31 As applied by
the Department, this regulation does not require SWAs to comply with the IG Act
or other applicable regulations requiring the OIG’s timely and complete access to
state UI program information for audits.32 Without changes to remove ambiguities
from 20 C.F.R. § 603.5(i), or adjustments to the Department’s interpretation of it,

21 20 C.F.R. § 603.6(a)
22 20 C.F.R. § 603.6(a)
23 Inspector General Act of 1978, as amended, Pub. L. 95-452, 5 U.S.C. App. 3, § 2(2)-(3) (the
OIG is required “to promote the economy, efficiency, and effectiveness in the administration of”
DOL programs and to keep the Secretary and Congress “fully and currently informed about
problems and deficiencies relating to the administration of such programs”)
24 UIPL No. 04-17 (December 16, 2016) interpreting 20 C.F.R. § 603.6(a)
25 UIPL No. 04-17, Change 1 (August 3, 2021); UIPL No. 22-21 (August 11, 2021)
26 UIPL No. 04-17, Change 1 (August 3, 2021)
27 UIPL No. 22-21 (August 11, 2021)
28 UIPL No. 04-17 (December 16, 2016) interpreting 20 C.F.R. § 603.5(i)
29 UIPL No. 04-17, Change 1 (August 3, 2021); UIPL No. 22-21 (August 11, 2021)
30 Audit Requirements for Grants, Contracts, and Other Agreements, 29 C.F.R. § 96.41 (2021)
31 This expressly includes disclosures under 29 C.F.R. § 96.41.
32 29 C.F.R. § 96.41 provides that the Secretary and the OIG “shall have access to any books,
documents, papers, and records (manual and automated) of the entity receiving funds from DOL
and its sub-recipients/subcontractors for the purpose of making surveys, audits, examinations,
excerpts, and transcripts.”
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the regulation will continue to impede OIG access authorities by preventing the
OIG from requiring SWAs to disclose UI information for audits.33

In response to a draft of this alert memorandum, ETA stated: “The regulations
permit, but do not require, states to provide such data to the OIG for audit
purposes.” ETA also stated that this “does not prevent the OIG from enforcing its
authority under the Inspector General (IG) Act.” However, ETA’s guidance gives
SWAs the option to decline OIG requests for information for audits, contrary to
the IG Act. The Department cannot issue guidance that enhances ambiguities
with other applicable Federal regulations, and permits SWAs to ignore the plain
language of the IG Act.34 Regardless of whether the regulations are ambiguous,
agencies may not interpret regulations in plain contradiction of superseding
statutes.

Cooperating with OIG audits and investigations is a necessary measure to help
DOL and ETA ensure proper program administration, including UI program
integrity. In issuing guidance35 in August 2021, the Department read the
regulation36 as written to require disclosures to the OIG for audits and
investigations as necessary for the proper administration of the UI program, but
only during the pandemic period.37

With the expiration of the period covered in that guidance,38 ETA reverted to its
original interpretation39 where SWAs were only required to disclose UI
information to the OIG’s Office of Investigations on a case-by-case basis, unless
they accepted grant funds to combat fraud.40 If SWAs accepted grant funds, they
were then only required to provide UI information to the OIG for audits and
investigations through December 31, 2023. As long as SWAs continue to receive

33 In UIPL No. 23-12 (issued June 25, 2012), ETA applied 20 C.F.R. § 603.5(i) to require SWAs to
disclose UI information, including confidential wage and claim information DOL collected and
used for Office of Management and Budget evaluations of UC programs. The guidance requires
SWAs to disclose the portions of UI data necessary for specific DOL evaluations, similar to the
OIG’s need for certain UI data for its audits.
34 The Department’s interpretations of ambiguous regulations is permissible only if it is
reasonable. See Kisor v. Wilkie, 139 U.S. 2400, 2415-16 (2019). Although 20 C.F.R. 603.5(i) is
ambiguous due to the contradictions with 29 C.F.R. 96.41 identified above, agency interpretations
of regulations that are unambiguous are entitled to even less deference and only to the extent
they are persuasive. See United States v. Mead Corp., 533 U.S. 218 (2001); Christensen v.
Harris County, 529 U.S. 576 (2000).
35 UIPL No. 04-17, Change 1 (August 3, 2021)
36 20 C.F.R. § 603.6(a)
37 ETA necessarily interpreted 20 C.F.R. § 603.5(i) as requiring disclosures to the OIG for audits
in UIPL No. 04-17, Change 1, because prior to this it maintained that disclosures to the OIG for
audits under this provision were optional. As we stated in the June 2021 alert memorandum and
do so again here, disclosures to the OIG under 20 C.F.R. § 603.5(i) were always mandatory
because such disclosures include disclosures under 29 C.F.R. § 96.41.
38 UIPL No. 04-17, Change 1 (August 3, 2021)
39 UIPL No. 04-17 (December 16, 2016)
40 UIPL No. 22-21 (August 11, 2021)
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any federal grants to administer their unemployment programs, ETA must
facilitate the OIG’s access to pertinent SWA information. Therefore, conditioning
the OIG’s access on whether SWAs accepted an additional grant award and
ending SWAs’ disclosure obligations when those funds expire contravenes the
IG Act.

The OIG notes that ETA’s issuance of the August 2021 guidance41 demonstrates
the Department can circumvent the restrictions it had previously read into its
regulations42 to require ongoing disclosures to the OIG for audits and
investigations without amending those regulations. ETA issued the new
guidance, citing § 2116 of the CARES Act, which provides authority for ETA to
issue operating instructions or other guidance necessary to carry out the
UI-related provisions of the CARES Act. ETA has relied on the CARES Act and
SWAs’ conditional acceptance of fraud prevention grant funds43 to bypass what it
interprets as limitations to OIG access for audits in its regulation.44

Furthermore, neither the CARES Act nor other relevant statutes limit the OIG’s
authority to access information to the dates that ETA set forth in its current
guidance to the SWAs. Any limitation on the OIG’s access to UI information
contravenes the IG Act. Reinterpreting the regulations as they are currently
written while ETA works on a permanent solution of amending
20 C.F.R. Part 603 will facilitate the OIG’s necessary ongoing access in the
interim period during which the regulation is amended.45

Although ETA has taken temporary steps to facilitate the OIG’s access to state
UI data through December 31, 2023, the OIG needs a permanent solution for the
timely and effective access to SWA UI data.

ETA’s Action in Response to Prior Recommendations Isn’t Sufficient to
Provide the OIG Ongoing Access to SWA UI Data

ETA must ensure consistency between its regulations, or it risks continued
violation of federal law, undermining DOL’s goals, creating uncertainty, and
increasing costs and burdens. Consequently, ETA must amend

41 UIPL No. 04-17, Change 1 (August 3, 2021); UIPL No. 22-21 (August 11, 2021)
42 20 C.F.R. §§ 603.5(i), 603.6(a)
43 UIPL No. 22-21 (August 11, 2021)
44 20 C.F.R. § 603.5(i)
45 In response to a draft of this alert memorandum, ETA stated that any change to its
interpretation of the regulations would require notice and comment rulemaking because it “would
affect the rights and obligations of the regulated community and as such would be a legislative
rule, not an interpretive rule.” ETA’s UIPLs referenced in this alert memorandum are interpretive
rules that merely clarify existing duties for affected parties by interpreting the Department’s
legislative rules (i.e., 20 C.F.R. Part 603; 29 C.F.R. § 96.41) that alter the rights and obligations of
SWAs and UI claimants. Altering interpretive rules does not require notice and comment
rulemaking, regardless of the impact of the change, so long as the underlying law is unchanged.
See Stupp Corp. v. United States, 5 F.4th 1341, 1352 (Fed. Cir. 2021)
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20 C.F.R. Part 603 provisions on federal oversight and audit authorities’ access
to eliminate any ambiguity regarding OIG access to SWA information in the
future. Since the beginning of the pandemic, the OIG and ETA have held
recurring meetings to discuss access issues and other open recommendations.

In July of 2022, ETA provided the OIG a specific timeline in which it is
considering comprehensive updates to the unemployment compensation
confidentiality regulation found at 20 C.F.R. Part 603, including requiring SWAs
to provide ongoing access to state unemployment compensation data. According
to the estimated timeline, the ruling effective date could be February 2025.
ETA is exploring other options for interim solutions to address the gap between
December 31, 2023, and the publication of amended regulations.

While we recognize ETA’s efforts to take action addressing our
recommendations and concerns, ETA’s plans are not sufficient to address our
concerns and immediate action is still needed. ETA’s current proposed action
results in a 14-month gap from when the period of performance for SWA fraud
prevention grants expires to when the proposed rule will go into effect. ETA has
not reached a final resolution on the OIG’s recommendations to amend both
federal regulation and UIPL guidance that would give the OIG unfettered and
on-going access to UI information.

Conclusion

As stated at the beginning of this alert memorandum, 18 months have elapsed
since February 2021, when the OIG first alerted ETA to potentially fraudulent
payments in the UI program within the four high-risk areas and recommended
ETA take corrective actions. In June 2021, we further alerted ETA that the total
had increased to $16 billion in these high-risk areas. Despite ETA’s concurrence
to implement the OIG’s recommendations, sufficient action has not been taken or
implemented that would help mitigate and prevent even more potential fraudulent
payments from occurring. We have now identified an additional $29.6 billion in
potentially fraudulent UI benefits paid, totaling a cumulative amount of
$45.6 billion.46 Additionally, the delays in providing the OIG accurate, timely, and
ongoing access to UI data led to interruptions in identifying potentially fraudulent
payments much earlier in the pandemic.

Furthermore, 14 months have elapsed since the June 2021 alert memorandum,
when the OIG first recommended ETA amend its regulation and UIPL guidance.
Adherence to our recommendations would give the OIG accurate and ongoing
access to UI information and effectively help mitigate fraud, waste, and abuse

46 Of the $45.6 billion total identified, the OIG had previously reported in prior OIG reports
$16 billion in potential fraudulent payments had been identified within the same four high-risk
areas discussed in this alert memo. This report identifies $29.6 billion in additional funds put to
better use that were not claimed in our prior reports. See attachment for detailed information,
including our calculation.
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- 12 -
within the UI program. ETA has not taken sufficient action to reach a final
resolution on the OIG’s recommendations. ETA needs to take immediate action
and provide the OIG unfettered access to complete and accurate UI data and not
only for the UI activities related to COVID-19 programs. We reported in our
June 2021 alert memorandum that we expected the actual amount of potential
fraud to continue to increase. The continual increases in potential fraud are a
significant concern that requires ETA’s immediate attention and action.

The OIG emphasizes the importance of ETA implementing prior and current
recommendations from the OIG, aimed at reducing, mitigating, and preventing
the payment of potentially fraudulent payments to ineligible claimants. Without
effective controls and amended federal regulations and guidance, the UI program
is exposed to substantial risks, including the cost of improper payments to
ineligible claimants. Establishing effective controls over identified high-risk areas
will help to prevent similar or even greater amounts of fraud when the next crisis
(i.e., a pandemic or recession) occurs.

Recommendations

We recommend the Assistant Secretary of Employment and Training:

1. Implement immediate measures to ensure SWAs are required to provide
ongoing access to the OIG by amending its current guidance to require
disclosures to the OIG for audits and investigations as necessary,
mandatory, and without time limitation for the proper oversight of the UI
program.

2. Expedite OIG-related amendments to 20 C.F.R. § 603.6(a) to make
ongoing disclosures of UI information to DOL OIG mandatory by expressly
adding the U.S. Department of Labor, Office of Inspector General
(including its agents and contractors) to the list of required disclosures that
are necessary for the proper oversight of the UI program without
distinction as to purpose (e.g., audits versus investigations).

3. Expedite OIG-related amendments to 20 C.F.R. § 603.5(i) to expressly
make disclosures of UI information to federal officials for oversight, audits,
and investigations of federal programs mandatory.

On September 13, 2022, ETA provided us their formal response to the draft alert
memorandum and recommendations (see Attachment II). The OIG appreciates
all the effort ETA has made since our February 22, 2021 alert memorandum.
Nonetheless, despite ETA’s agreement to implement the OIG’s
recommendations, sufficient action has not been taken or implemented that
would help mitigate and prevent even more potentially fraudulent payments from
occurring. Our concerns remain regarding $45.6 billion in potential fraud in the
four high-risk areas and regarding a more permanent solution to unfettered
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access to UI data, especially given the 14-month gap between
December 31, 2023, and the potential rulemaking date of February 2025.
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ATTACHMENT I

Potential Funds for Better Use47

Table 1: Total Net Funds for Better Use

Description
Amount

Total Funds for Better Use

$45.7 Billion

Funds for Better Use Claimed
in Prior OIG Alert Memoranda48

($16.1 Billion)

Net Funds for Better Use

$29.6 Billion

The table shows the total net funds for better use for the four high-risk areas
previously identified. For the period March 2020 to April 2022, the total potential
fraud we identified in this alert memorandum was $45.7 billion. To prevent double
counting, we subtracted the $16.1 billion in potential fraudulent payments
identified in the previous June 16, 2021, alert memorandum. The scope of that
analysis was March 2020 to October 2020. As a result, we are claiming $29.6
billion as total net funds for better use in this alert memorandum.

47 As defined by the Inspector General Act of 1978, “funds for better use” means funds that could
be used more efficiently or achieve greater program effectiveness if management took certain
actions. These actions include reduction in future outlays and deobligation of funds from
programs or operations.
48 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

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ATTACHMENT II

U.S. Department of Labor
September 13, 2022
MEMORANDUM FOR:
FROM:
SUBJECT:
Employment and Training Administration
200 Constitution Avenue, N.W.
Washington, D.C. 20210
CAROLYN R. HANTZ
Assistant Inspector General for Audit
BRENTPARTONW
Acting Assistant Secretary
Response to Draft Alert Memorandum: Potentially
Fraudulent Unemployment Insurance Payments in High-
Risk Areas Increased to $45. 6 Billion, Report Number: l 9-
P22-009-03-3 l 5
The Department of Labor's (Department) Employment and Training Administration (ETA)
appreciates the opportunity to respond to the above-referenced Office oflnspector General (OIG)
draft alert memorandum.
ETA recognizes the OIG's crucial role under the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, Pub. L.116-136, in helping to combat fraud and abuse within the
Unemployment Insurance (UI) programs. Additionally, ETA agrees with the OIG's assessment
regarding the significant increase in fraudulent activity challenging state UI programs across the
nation during the pandemic. ETA is committed to continuing its efforts to explore, research,
identify, and provide states with new tools, resources, strategies, and guidance, as warranted, to
help states combat the continually changing and new types of sophisticated fraud impacting the
UI system.
This alert memorandum builds on and provides additional information since the OIG's February
2021 alert memorandum, The Employment and Training Administration (ETA) Needs to Ensure
State Workforce Agencies (SWA) Implement Effective Unemployment Insurance Program Fraud
Controls for High Risk Areas, Report Number: 19-21-002-03-315. ETA would like to take this
opportunity to detail the many actions taken by ETA since February 2021 to support states in
addressing fraud. Many ofETA's actions have been directly aimed at addressing the specific
types of fraud identified by the OIG: individuals using identical social security numbers to file
claims across multiple states, using social security numbers belonging to deceased persons and
incarcerated individuals, and filing claims with suspicious email accounts.
ETA 's Efforts to Combat Fraud in the UI Program. ETA continues to actively and
aggressively address fraud in the Unemployment Compensation (UC) programs and UI program
integrity remains a top agency priority. While this alert memorandum focuses almost
exclusively on facilitating OIG's access to state-owned UI data, ETA's efforts extend beyond
this to also include providing extensive guidance, technical assistance, and funding to states to
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support them in combatting fraud and reducing improper payments, which includes
strengthening fraud prevention and detection and improving overpayment recovery activities.
ET A has invested in new tools, datasets, and resources and made these available to states to aid
states in more quickly identifying potential fraud. ET A continues to develop and oversee
implementation of fraud mitigation strategies to address emerging and evolving fraud risks.
Since the publication of the earlier alert memorandum in February 2021, ETA has taken the
following actions supporting states' efforts to address fraud in the UI programs:
•
ET A continues to provide guidance to states in the form of Unemployment Insurance
Program Letters (UIPL) and Training and Employment Notices (TEN) that alert states to
new UI program requirements, important program trainings, UI integrity resources, and
operational recommendations. ETA has included a focus on fraud prevention and
program integrity in the majority of its recent guidance documents and has issued a total
of21 program integrity-related UIPLs and TENs since February 2021. A list of these
guidance documents is provided in Attachment I to this response.
•
ET A continues to provide fraud prevention grant opportunities to states to strengthen
their efforts. Prior to February 2021, ETA announced the availability of up to a total of
$200 million in fraud prevention grants and awarded states a total of $199. 7 million in
funding to prevent and detect fraud and recover overpayments in the Pandemic
Unemployment Assistance (PUA) and Pandemic Emergency Unemployment
Compensation (PEUC) programs. Since February 2021, ETA has announced the
availability ofup to an additional $465 million (a total ofup to $665 million) in funding
to states for fraud prevention and detection and overpayment recovery activities. See
UJPL No. 28-20, Change 2, issued August 11, 2021; UIPL No. 28-20, Change 4, issued
July 22, 2022; and UIPL No. 22-21, issued August 11, 2021.
•
Since July 2021, the Department has been deploying multidisciplinary technical
assistance teams (Tiger Teams) to states to conduct consultative assessments to address
state-specific, unique challenges and to collect best practices on preventing and detecting
fraud, promoting equitable access, reducing backlogs, and ensuring timely payment of
benefits. To date, the Department's Tiger Teams have worked with 24 states to address
immediate needs and issues to achieve improvements in operational processes and
customer experiences, while also proposing solutions to address fraud and support more
equitable access for legitimate claimants.
ETA also provided a grant opportunity under UIPL No. 02-22, making available to states
up to $200 million to support states in improving UC systems and processes following a
Tiger Team consultative assessment for fraud detection and prevention, promoting
equitable access, and ensuring the timely payment of benefits, including backlog
reduction, for all UC programs. Trends from the Tiger Teams recommendations are
found at https://oui.doleta.gov/unemploy/pdf/TigerTeamCohottTrendsJune 2022.pdf.
•
ET A has included combatting UI fraud, in addition to reducing UI improper payment
rates, as a National Priority for state UI agencies as part of the annual State Quality
2
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Service Plan (SQSP) process for Fiscal Years (FY) 2022 and 2023 (see UIPL No. 24-21,
issued August 20, 2021, and UIPL No. 17-22, issued July 22, 2022). ETA also increased
states' SQSP Integrity Action Plan (IAP) reporting requirements for the FY 2022 SQSP
IAP by requiring states to begin providing a six-month IAP update to their integrity
strategies. Furthermore, ETA developed a new IAP template for states' use in
developing their FY 2023 SQSP IAP submissions and is requiring states to submit more
comprehensive and detailed IAPs that address specific integrity topics, including fraud
prevention and detection and overpayment recovery strategies in FY 2023.
•
On March 22, 2021, the Department launched www.dol.gov/fraud, a website created for
people to understand UI identity fraud, how to report it, and to provide resources to help
victims. The Office of Unemployment Insurance (OUI) worked closely with other
federal and state agencies to consolidate the necessary steps to help victims of UI identity
fraud and conducted testing to confirm the website's instructions were clear and easy to
understand.
•
Following the OIG's data analysis ofUI claims data obtained from subpoenas and
discussed in the alert memorandum issued on February 22, 2021, ETA developed a
process to receive data from the OIG and share encrypted files with states that included
the results of the OIG's analysis. ETA coordinated and oversaw delivery of this data to
the states to aid state efforts in preventing fraud and in pursuing investigations on these
claims. This was completed at the end of April 2021.
•
The Department, in partnership with the Social Security Administration (SSA),
established a secure incarceration data exchange between the Interstate Connection
Network (ICON) and the SSA's Prisoner Update Processing System (PUPS). The
incarceration data exchange provides state UI agencies with the ability to cross-match UI
claims information with SSA's prisoner data to aid states in determining if an individual
meets UI eligibility requirements. See UIPL No. 01-22.
•
ET A continues to provide funding and support to the UI Integrity Center to enhance
existing tools and develop new resources for states to use to combat fraud, strengthen
fraud prevention and detection of improper payments, enhance fraud management
operations, and improve overpayment recovery efforts. ET A has strongly encouraged
states to take advantage of the UI Integrity Center's resources, specifically the Integrity
Data Hub (IDH). State participation in the IDH increased significantly since February
2021, at which time only 39 states were using the Suspicious Actor Repository (SAR), 32
states were using the Multi-State Cross-Match, (MSCM), and 21 states were using the
Identity Verification solution (IDV). To date, all 53 states have executed an IDH
Participation Agreement, 50 states are using the SAR, 48 states are using the MSCM, and
41 states are using the IDV solution. ET A continues to work with all states to strengthen
the robustness and frequency of how they are using these tools. In addition, the UI
Integrity Center has made extensive enhancements to IDH functionality and developed
new tools and resources to support states with UI integrity and fraud prevention activities.
A list of these enhancements and resources are provided in Attachment II to this
response.
3
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•
ETA continues to strengthen our partnership with the OIG by meeting regularly with the
OIG to discuss emerging UI fraud issues, streamline communication with states, and
coordinate fraud prevention and overpayment recovery efforts. ETA's activities
occurring in partnership with the OIG are set out in Attachment III to this response.
•
ET A has worked with states, Federal law enforcement, and banks to facilitate
conversations and aid in the recovery of fraudulently obtained and overpaid UI funds.
ET A has provided guidance, technical assistance, coordination, and education
opportunities to state UI programs to help states navigate the complexities of the
Automated Clearing House (ACH) network, banking regulations, law enforcement
initiatives, and the many other challenges associated with overpayment recovery. These
efforts are reflected in Attachment IV to this response.
•
The Department continues to encourage states to strengthen identity verification
processes and procedures and is exploring options to provide states with additional
support in this area. The Tiger Teams have made recommendations to eight states to
improve identity verification. The recommendation notes that the Department strongly
encourages states to adopt an array of solutions and techniques to detect and fight fraud
and to have robust strategies in place to verify the identity of individuals applying for UI
benefits. On April 13, 2021, ETA issued guidance to highlight the importance of identity
verification in ensuring the proper payment of unemployment benefits and to provide
guidance to states on required administrative procedures when processing claims and
determining UI eligibility in cases where an individual's identity is questionable. See
UIPL No. 16-21. The Department is currently engaged with the Government Services
Administration (GSA) to explore the identity verification services available through
GS A's login.gov. On March 31, 2022, an initial pilot began with a state UI agency to
evaluate login.gov as a potential identity proofing solution for state UC programs. The
Department is continuing to evaluate the pilot to examine how login.gov might be
implemented in ways that best support equitable access and program integrity goals, as
well as how the Department might extend the solution to other states.
Filing UJ Claims in Multiple States. Concerning the content of this alert memorandum, ETA
believes a couple of topics merit comment. First, in discussing multi-state claims, the OIG
erroneously states that a claimant can only file for UI benefits in one state and indicates as part of
their methodology to estimate the potential amount of fraud, that they examined claims using the
same social security number filed in two or more states. In fact, individuals may file in multiple
states; however, they are only eligible to receive benefits from one state and one program for any
given week of unemployment. For example, a person may work and earn wages in multiple
states and is unsure in which state they should file a claim. So, they file in the states they have
earned wages. The state agencies then determine the appropriate paying state and will request
the wage credits from the other state(s) transferred to the paying state for use in determining
eligibility.
Facilitating OJG Access to State-Owned UJ Data. Next, ET A notes that much of this alert
memorandum focuses on the OIG's recommendation to have access to state UI data for
investigative and audit purposes. This issue has been addressed in prior OIG reports and alert
4
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memoranda. ETA is concerned that the OIG's mischaracterization of the Department's efforts to
provide the OIG access to state UI data portrays ETA as opposing or obstructing the effort to
provide such access. This characterization is not fair and is not reflective of ET A's actions. The
UI confidentiality regulation does not obstruct the OIG from accessing state UI data. ET A has
acted to provide the OIG the requested access but is limited by the Administrative Procedure Act
(APA) in what it can do immediately and continues to pursue ongoing efforts in good faith to
provide access. In addition, contrary to what is conveyed in this alert memorandum, ET A has
not changed the interpretation of its UI confidentiality regulations or created any type of
exemption to the regulations.
The UI confidentiality regulation, found at 20 CFR Part 603 and explained in UIPL No. 04-17,
Change Lare derived from the "methods of administration" requirement of Section 303(a)(l) of
the Social Security Act and require states to provide the OIG their UI data for investigative
purposes. The regulations permit, but do not require, states to provide such data to the OIG for
audit purposes. As such, the Department is unable to enforce such disclosure for purposes of
audit as a condition of states receiving their UI administrative grant, but this does not prevent the
OIG from enforcing its authority under the Inspector General (IG) Act. The alert memorandum
mischaracterizes the Department and the existing UI confidentiality regulations as obstructing
the OIG's access to data. The regulations, which implement Section 303(a)(l) of the Social
Security Act, do not obstruct the OIG's access. The OIG, using its own authority under the IG
Act, may request the data and the UI confidentiality regulations permit states to provide the data
for audit purposes.
In the Department's Spring 2022 regulatory agenda, ETA announced that it is considering an
update that would, among other things, require states, as a condition ofreceiving their UI
administrative grant under the Social Security Act, to provide the OIG with ongoing access to UI
data for audit purposes, in addition to investigative purposes, and that ET A intends to publish a
Request for Information concerning this matter in November 2022.
ET A has been taking actions to support the OIG having access to UI data for both purposes in
the interim until the existing regulations can be revised. ln August 2021, using authority
provided under the CARES Act, ETA issued guidance to states requiring states to provide the
OIG access to UI data for investigations and audits for weeks of unemployment through the
expiration date of the CARES Act programs. This alert memorandum repeatedly
mischaracterizes the recent guidance issued by the Department as a reinterpretation of, or a new
exception, to the existing UI confidentiality regulations. This is not correct. This guidance was
not the result of a new interpretation or exception to the regulation. It was done under the
temporary authority of the CARES Act. The Department relied on its authority under the
CARES Act to issue implementing guidance without going through notice and comment
rulemaking. In addition, and separate from the CARES Act, the guidance reiterated an ongoing
requirement to disclose such data to the OIG for fraud investigations and rescinded prior
guidance to make clear that such disclosures do not require any written agreement between the
state and the OIG.
Also, in August 2021, ET A made available to states an opportunity to seek fraud prevention
grants and conditioned these grants on states providing the OIG access to state UI data. Fifty
5
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states have been awarded these grants which currently have a performance period through
December 2023. ETA has committed to the OIG that it is actively exploring future opportunities
to continue the requirement for states to provide the OIG access to data until the regulations can
be revised.
Finally, the Department has committed to pursuing a change in the regulations set forth at 20
CFR Part 603 to require states to provide UI data for audits, but to exercise that authority, the
Department must do so through notice and comment rulemaking because this would be a new
interpretation of the statute that would affect the rights and obligations of the regulated
community. The AP A prohibits the Department from issuing new requirements without first
providing notice to the public and an opportunity for comment.
Response to the OIG Recommendations
ET A is committed to continuing its work with states to implement the OIG's recommendations.
Below, please find each of the OIG's recommendations contained in this alert memorandum
followed ET A's response and proposed action steps to address them.
Recommendation 1: Implement immediate measures to ensure [State Workforce Agencies]
SW As are required to provide ongoing access to the OIG by amending its current
guidance, consistent with the OIG's analysis of20 C.F.R. 603, 29 C.F.R. Part 96 and the IG
Act, to require disclosures to the OIG for audits and investigations as necessary,
mandatory, and without time limitation for the proper administration of the UI program.
ET A Response: ETA is committed to exploring all avenues and opportunities to legally require,
rather than permit, states to provide the OIG access to state UI data, including for audit purposes.
However, ETA is bound by the AP A to engage in notice and comment rulemaking to make
changes to the regulations at 20 C.F.R. Part 603. ETA will examine future grant opportunities as
possible ways to extend the current grant condition on the fraud prevention grants. ETA will
also look at other actions that can be taken to achieve this outcome. Based on a conversation
with the OIG auditors and counsel on September 6, 2022, ETA will issue, as quickly as possible,
a TEN reiterating the authority of the OIG under§ 6(a) of the IG Actto request information and
data from states for investigations and audits and that the Department's regulations do not
contradict this authority. The TEN will encourage states to comply with any such requests made
by the OIG.
Recommendation 2: Expedite OIG-related amendments to 20 C.F.R. § 603.6(a) to make
ongoing disclosures ofUI information to DOL OIG mandatory by expressly adding the
U.S. Department of Labor, Office of Inspector General (including its agents and
contractors) to the list of required disclosures that are necessary for the proper
administration of the UI program without distinction as to purpose (e.g., audits versus
investigations).
ET A Response: Based on a conversation with the OIG auditors and counsel on September 6,
2022, ETA will issue, as quickly as possible, a TEN reiterating the authority of the OIGunder
§6(a) of the IG Act to request information and data from states for investigations and audits and
6
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that the Department's regulations at 20 CFR Part 603 do not contradict this authority. The TEN
will encourage states to comply with any such requests made by the OIG. ETA will also
continue with efforts to pursue changes to the UI confidentiality regulations at 20 CFR Part 603,
but to do so, the Department must comply with the notice and comment requirements of the
AP A, given that this requirement is in a regulation and any change to the Part 603 regulations
would affect the rights and obligations of the regulated community and as such would be a
legislative rule, not an interpretive rule. As discussed in the response to Recommendation 1,
ET A is committed to finding a path to continue the requirement beyond the current grant
condition that is effective through December 2023, until the regulations can be properly changed.
ET A will keep the OIG apprised of the efforts to achieve this result until it is accomplished.
Recommendation 3: Expedite OIG-related amendments to 20 C.F.R. § 603.S(i) to expressly
make disclosures of UI information to federal officials for oversight, audits, and
investigations of federal programs mandatory.
ET A Response: Based on a conversation with the OIG auditors and counsel on September 6,
2022, ETA will issue, as quickly as possible, a TEN reiterating the authority of the OIG under
§ 6(a) of the IG Act to request information and data from states for investigations and audits and
that the Department's regulations at 20 CFR Patt 603 do not contradict this authority. The TEN
will encourage states to comply with any such requests made by the OIG. ETA will also
continue with efforts to pursue changes to the UI confidentiality regulations at 20 CFR Part 603,
which requires the Department to comply with the notice and comment requirements of the
AP A As discussed in the response to Recommendation 1, ETA is committed to finding a path
to continue the requirement beyond the current grant condition that is effective through
December 2023, until the regulations can be properly changed. ET A will keep the OIG apprised
of the efforts to achieve this result until it is accomplished.
7
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Attachment I
lntegtity-Related Unemployment Insurance Program Letters (UIPL) and Training and
Employment Notices (TEN) issued since February 2021
•
UIPL No. 28-20, Change 4, Support for States to Resolve Outstanding Items from the
Expired Coronavirus Aid, Relief, and Economic Security (CARES) Act Unemployment
Compensation (UC) Programs, Including Additional Funding to Assist States with
Reporting and Detection and Recovery ofOve,payments, issued July 22, 2022
•
UlPL No. 17-22, Additional Planning Guidance for the Fiscal Year (FY) 2023
Unemployment Insurance (UI) State Quality Service Plan (SQSP), issued July 22, 2022
•
UlPL No. 16-22, Announcement of the Pandemic Unemployment Assistance (PUA)
Improper Payment Estimate Reviews and the Cancellation of the 2022 Benefit Accuracy
Measurement (BAM) Paid Claims Peer Reviews, issued July 14, 2022
•
UIPL No. 02-22, Grant Opportunity to Support States Following a Consultative
Assessment for Fraud Detection and Prevention, Promoting Equitable Access, and
Ensuring the Timely Payment of Benefits, including Backlog Reduction, for all
Unemployment Compensation (UC) Programs, issued November 2, 2021
•
UIPL No. 01-22, Announcing the Availability of an Incarceration Data Exchange and
Instructions to Access the Data Exchange between the Unemployment Insurance (UI)
Interstate Connection Network (ICON) and the Social Security Administration (SSA)
Prisoner Update Processing System (PUPS), issued October 29, 2021
•
UIPL No. 16-20, Change 6, Pandemic Unemployment Assistance (PUA) Program:
Updated Operating Instructions and Reporting Changes, issued September 3, 2021
•
UJPL No. 24-21, Additional Planning Guidance for the Fiscal Year (FY) 2022
Unemployment Insurance (UI) State Quality Service Plan (SQSP), issued August 20,
2021
•
UlPL No. 22-21, Grant Opportunity to Support States with Fraud Detection and
Prevention, Including Identity Verification and Overpayment Recovery Activities, in All
Unemployment Compensation (UC) Programs, issued August 11, 2021
•
UlPL No. 28-20, Change 2, Additional Funding to Assist with Strengthening Fraud
Detection and Prevention Efforts and the Recovery of Overpayments in the Pandemic
Unemployment Assistance (PUA) and Pandemic Emergency Unemployment
Compensation (PEUC) Programs, as well as Guidance on Processes for Com batting
Identity Fraud, issued August 11, 2021
•
UIPL No. 04-17, Change l, Requirement for States to Refer Allegations of
Unemployment Compensation (UC) Fraud, Waste, Abuse, Mismanagement, or
I-1
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Attachment I
Misconduct to the Department of Labor's (Department) Office of Inspector General's
(DOL-OIG) and to Disclose Information Related to the Coronavirus Aid, Relief, and
Economic Security (CARES) Act to DOL-OIG for Pwposes of UC Fraud Investigation
and Audits, issued August 3, 2021
•
UIPL No. 20-21, State Instructions for Assessing Fraud Penalties and Processing
Overpayment Waivers under the Coronavirus Aid, Relief, and Economic Security
(CARES) Act, as Amended, issued May 5, 2021
•
UIPL No. 19-21, Benefits Held by Banks and Financial Institutions as a Result of
Suspicious and/or Potentially Fraudulent Activity and the Proportional Distribution
Methodology Required for Recovering/Returning Federally Funded Unemployment
Compensation (UC) Program Funds, issued May 4, 2021
•
UIPL No. 16-21, Identity Verification for Unemployment Insurance (UI) Claims, issued
April 13, 2021
ListofTENs
•
TEN No. 01-22, Adjudications Virtual Training and Conference, issued July 20, 2022
•
TEN No. 24-21, Encouragement for States to Use the Integrity Data Hub (!DH)
available through the Unemployment Insurance (UI) Integrity Center, issued May 5,
2022
•
TEN No. 23-21, Unemployment Insurance Interstate Benefits and Federal Programs
Training, issued March 14, 2022
•
TEN No. 22-21, 2022 Unemployment Insurance (UI) State Information Data Exchange
System (SIDES) Seminar, issued March 3, 2022
•
TEN No. 16-21, Announcing Grant Awards Made to States Selected to Participate in the
Unemployment Insurance (UI) Information Technology (IT) Modernization Project -
Claimant Experience Pilot, issued December 2, 2021
•
TEN No. 15-21, Announcing the National Association of State Workforce Agencies
(NASWA) Unemployment Insurance (UI) Integrity Center's Behavioral Insights Toolkit,
issued November 17, 2021
•
TEN No. 06-21, Accessing Unemployment Insurance (UI) Identity Verification and
Fraud Protection (Identity Proofing) Services using the U.S. Department of Labor's
(Department) Blanket Purchase Agreements (EPA), issued September 15, 2021
•
TEN No. 19-20, 2021 Unemployment Insurance (UI) State Information Data Exchange
System (SIDES) Seminar, issue March 15, 2021
1-2
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Attachment II
Unemployment Insnrance (UI) Integrity Center Enhancements and Resources
(Since February 2021)
•
Implementation of a Bank Account Verification (BA V) service. The BA V service
provides states with access to near real-time information to proactively identify and
authenticate bank account information provided by the UI claimant by validating the
account's status and ensuring the individual identified as the claimant is the account
owner and/or authorized user prior to initiating the UI benefit payment. The BA V
service went into Integrity Data Hub (IDH) production on February 15, 2022, and to date,
29 states are using the BA V service.
•
Completion of two IDH Results Management projects, which includes IDH Results
Prioritization that went live on June 22, 2021, and IDH Results Sorting, Filtering, and
Outcomes that went live on May 5, 2022. IDH Results Prioritization allows states to
receive IDH results in order of priority level to help states more quickly identify
emerging UI fraud schemes. IDH Results Sorting, Filtering, and Outcomes allows states
to analyze and manage IDH results quickly and easily. It also allows states to provide
outcomes data to the IDH team which helps the IDH team better understand how states
are utilizing the IDH.
•
In October 2021, the UI Integrity Center launched the Behavioral Insights (BI) toolkit
which brings together practices from the field of behavioral science to promote UI
integrity and reduce UI improper payments. The BI Toolkit offers a collection of
resources to help UI agencies improve integrity and customer compliance through
targeted changes to program communications and processes. The BI toolkit includes a
sub-collection ofresources, articles, templates, and how-to information housed within the
online Knowledge Exchange Library. On November 17, 2021, ETA issued Training and
Employment Notice No. 15-21, announcing the availability of the BI toolkit.
•
Conducted 10 webinars for states on fraud prevention and detection strategies, including
webinars on UI identity fraud, internal security, fictitious employers, identity verification,
overpayment recoveries, and IDH results management and prioritization.
•
Presented to states on fraud prevention, detection, and overpayment recovery strategies
and effective integrity tools during multiple events in Calendar Year 2021 and 2022,
including the 2022 National Association of State Workforce Agencies' UI Interstate
Benefits and Federal Programs Training Conference, the State Information Data
Exchange Seminar, and the 2021 NASWA Summit.
•
Convened monthly regional integrity workgroups with state UI integrity management and
field staff to provide states an opportunity to share and discuss specific integrity
strategies and share promising practices, recent fraud activities and countermeasures, and
innovative operational enhancements on integrity topics with the broader UI community.
II-1
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Attachment II
•
Continued adding to the UI collection in the Knowledge Exchange Library (Library),
which is an online, searchable, knowledge-sharing platform that includes a repository of
all UI Integrity Center resources including, model state operational processes, promising
state practices, and recommendations to strengthen UI program integrity. The Library
currently contains over 2,600 UI integrity-related resources.
•
TI1e UI National Integrity Training Academy (Academy) continues to develop and
provide rigorous and relevant training programs and materials to states, offering program
integrity training for state UI staff via online, eLeaming modules and virtual instructor-
led trainings that lead to credentials and certification. Current all-time enrollments in
Academy trainings are up to 13,690 learners, which represent all 53 states.
II-2
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Attachment III
Employment and Training Administration (ETA) Activities in Partnership with the Office
of Inspector General (OIG) (Since February 2021)
•
On May 12, 2021, ETA coordinated a call with states and the OIG to provide updates on
OIG activities and to encourage states to partner with the OIG to combat fraud.
•
On August 3, 2021, ETA issued Unemployment Insurance Program Letter (UIPL) No.
04-17, Change 1, which outlined requirements for states to refer allegations of
Unemployment Compensation (UC) fraud, waste, abuse, mismanagement, or misconduct
to the OIG and to disclose information related to the Coronavirus Aid, Relief, and
Economic Security (CARES) Act to the OIG for purposes of UC fraud investigation and
audits. ETA also reminded states of their requirements to share information requested by
the OIG for both audits and investigations for the period of performance of the grants that
otherwise would not be required of states.
•
On August 11, 2021, ETA issued UIPL No. 22-21, announcing the availability for fraud
prevention grant funding and conditioned the award of the grants on states agreeing to
information disclosure with the OIG.
•
ET A updated the Unemployment Insurance (UI) Integrity Center's cooperative
agreement to include Integrity Data Hub (IDH) data sharing with the OIG. ET A and the
UI Integrity Center are actively engaged in a substantial data extract project to share IDH
data with the OIG and have completed several actions to advance this effort. Anew IDH
Participation Agreement was developed, to include a provision for sharing state IDH
information with the OIG. ETA announced Version 5.0 of the IDH Participation
Agreement in Training and Employment Notice No. 24-21 on May 5, 2022. In addition,
the UI Integrity Center provided an estimated timeline and budget to ETA for the OIG
IDH Data Extract project on April 15, 2022.
•
ET A worked with the OIG to develop and refine a process for states to submit fraudulent
Facebook pages directly to Facebook to facilitate the quick removal of the fake social
media pages.
•
ETA engaged with the OIG and other Federal agencies on a workgroup to identify
strategies to mitigate text message phishing schemes. As part of this effort, ETA's
Regional Offices obtained information for the workgroup about the scope of the
fraudulent text messaging issue by asking states to provide examples/screenshots of
known text messaging schemes. ETA's Regional Offices also gathered information from
states on their current text messaging practices to inform public outreach regarding
fraudulent text messaging.
•
ET A disseminates National Unemployment Insurance Fraud Task Force alerts to its
Regional Offices and the states.
III-1
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Attachment III
•
ETA held a national "meet and greet" meeting between ET A's Regional Offices and the
OIG's Regional Offices on December 6, 2021, to strengthen the Regional Office
relationships and to begin developing reoccurring joint ETA/OIG Regional Office calls
with states to share fraud trends and analysis, provide recommendations for responding to
emerging fraud schemes, offer updates on prosecution efforts, and facilitate sharing of UI
fraud and integrity-related challenges and best practices among states. ET A's Regional
Offices began hosting the joint quarterly conference calls with the OIG and the states in
the first quarter of Calendar Year 2022 and continues to hold calls each quarter.
•
On August 25, 2022, ETA and the OIG presented to over 1,200 UI adjudicators during
the closing plenary of the adjunction training conference. ETA presented on national UI
integrity efforts and the OIG presented on their case work in the UI fraud space. The
presentations outlined the need for ETA, state UI agencies, and the OIG to work together
to prevent and detect UI fraud through enhanced collaboration and data sharing.
III-2
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