U.S. Department of Labor Office of Inspector General — Member Briefing Before the U.S. House of Representatives

Summary

The opening statement of Scott S. Dahl, Inspector General of the U.S. Department of Labor Office of Inspector General, for a Member Briefing before the U.S. House of Representatives Committee on Oversight and Reform Subcommittee on Government Operations, June 1, 2020. The statement says that more than 40 million unemployment claims were filed over the last few months and that the CARES Act expanded UI benefits by more than 260 billion dollars, which it says increases fraud risk. It states that the OIG is investigating the alleged theft and fraudulent use of over 3 dozen frontline healthcare workers' identities and more than 300 investigative matters involving UI fraud. It also describes an alert on self-certifications for Pandemic Unemployment Assistance and a fraud alert about scammers.

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         U.S. Department of Labor
         Office of Inspector General


            Member Briefing




Member Briefing before the U.S. House of Representatives
         Committee on Oversight and Reform
      Subcommittee on Government Operations



           Opening Statement of Scott S. Dahl
                   Inspector General
              Office of Inspector General
               U.S. Department of Labor

                      June 1, 2020
                        12 p.m.
                                    U.S. Department of Labor – Office of Inspector General


Thank you, Mr. Chairman. Good afternoon.


More than 40 million unemployment claims were filed over the last few months, and
tens of millions of people are struggling through this pandemic without the economic
security and health coverage of full employment. This is why the Department of Labor
must exercise strong oversight of the unemployment insurance, or UI program, along
with delivering on other vital DOL programs.


UI is a joint federal-state program that provides benefits to those who have lost their
jobs. DOL directs and oversees this nationwide system, and individual states administer
it. The OIG provides independent oversight through audits to strengthen the program
and criminal investigations to combat large-scale fraud. Over the past 10 years, our UI
work has resulted in more than 3.7 billion dollars in monetary accomplishments – an
estimated return of 32 dollars for every dollar taxpayers invested in the OIG.
Let me quickly highlight several concerns about challenges that the Department and
states are facing relating to the UI program.


First, as a result of the unprecedented increase in unemployment claims, states are
struggling to pay claimants as quickly as possible, at the same time ensuring that
benefits are paid properly. We reminded DOL of previously identified program
weaknesses, including inadequate state staffing and outdated IT systems. Though the
Department and states have taken steps to improve these areas, we remain concerned
about the effectiveness of their efforts.


Second, the enormous expansion of UI benefits by more than 260 billion dollars under
the CARES Act also substantially increases fraud risk, with criminals easily exploiting
system vulnerabilities. For example, we are currently investigating the alleged theft and
fraudulent use of over 3 dozen frontline healthcare workers’ identities that were stolen
while they were combatting COVID-19. Fraudsters allegedly used these victims’


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                                    U.S. Department of Labor – Office of Inspector General


identities to file fraudulent unemployment claims in multiple states. This is just one
example of more than 300 investigative matters involving UI fraud we are aggressively
pursuing.


The Department has estimated that about 10% of UI payments are improper under the
best of times, and we are in the worst of times. That means at least 26 billion dollars will
be wasted and a large portion of that will be pocketed by fraudsters instead of going to
legitimate workers.


To help DOL and states address these challenges, we recently issued several important
reports and alerts.


Last week we issued an alert about self-certifications for Pandemic Unemployment
Assistance authorize by the CARES Act. This assistance is for self-employed, gig
workers, and others not covered under the regular UI programs. We alerted the
Department that states’ reliance solely on self-certification to determine eligibility
significantly increases the risk of fraud – and we have seen evidence of this in recent
investigations. DOL should seek clarification from Congress or request legislative action
to curtail this fraud.


The OIG also issued a fraud alert about scammers taking advantage of people applying
for benefits by falsely offering to help them file claims only to misuse their personal and
financial information in stealing these payments. We sent this alert to state workforce
agencies and DOJ to warn the public not to fall prey to such scams.


We are coordinating with the National Center for Disaster Fraud, US Attorneys’ Offices,
state workforce agencies, and our law enforcement partners on pandemic related fraud,
and we just conducted UI fraud training to more than 300 of these partners nationwide.
Further, as a member of the Pandemic Response Accountability Committee, we are


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working with other OIGs to detect and prevent fraud and mismanagement of the trillions
of dollars provided by the CARES Act and other legislation.


In addition, we are reviewing the pandemic response efforts of other DOL agencies,
including OSHA’s actions to protect health care workers on the front lines of this
pandemic, and OSHA’s guidance to help employers prevent COVID-19 infections in the
workplace.


We appreciate the subcommittee’s continued support of our independent oversight
work. Thank you for the opportunity to provide this briefing today.




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