Rep. Steel Joins Top Ways & Means Republicans to Act Against Unchecked Unemployment Fraud
Drafted following the rampant unemployment fraud and abuse of the Pandemic Unemployment Aid program
Washington, D.C. –Today Rep. Michelle Steel (R-CA) joined top Republican on the House Ways and Means Committee Kevin Brady (R-TX), alongside House Republican Leader Kevin McCarthy (R-CA), Republican Leader of the Worker and Family Support Subcommittee Rep. Jackie Walorski (R-IN) and 13 other Ways and Means Republicans, to introduce the Combatting COVID Unemployment Fraud Act of 2021 (H.R. 3268).
The bill will prevent fraud in COVID unemployment programs, recover fraudulently paid benefits, and provide relief for taxpayers and victims of unemployment fraud. In February, Rep. Steel and Rep. McCarthy led the Republican California delegation in a letter to the Newsom Administration expressing outrage regarding the $11.4 billion in fraudulent COVID-related unemployment assistance payments made by the State of California. The California Employment Development Department (EDD) confirmed that it has paid billions in fraudulent unemployment claims, mostly through the new Pandemic Unemployment Aid (PUA) program.
A companion bill to H.R. 3268 was also introduced in the U.S. Senate by Senate Finance Committee Ranking Member, Senator Mike Crapo (R-ID).
“The State of California has paid out billions in fraudulent unemployment claims, all at the expense of hardworking taxpayers. Fraudsters and criminals had access to the state’s money through widespread fraud, all while those in need of the program’s funding waited patiently for support that never came. This is an embarrassment, and it can never happen again. That’s why I teamed up with my colleagues in Congress to combat future abuse and help recover the benefits that were fraudulently paid out. Especially as we rebuild from the COVID-19 pandemic, American taxpayers deserve better,” said Rep. Steel.
“We are living through the greatest theft of American tax dollars in history, up to $200 billion lost to fraud--twice the amount we spend each year to take care of our veterans. Unfortunately, Democrats in Washington are ignoring this growing problem and refuse to have even a single oversight hearing. Congress has a responsibility to ensure COVID relief doesn't remain a windfall for fraudsters," said Rep. Brady.
“Since the pandemic began, criminals have taken advantage of Covid unemployment programs, causing fraud, waste, and abuse of taxpayer dollars. In my home state of California alone, widespread unemployment fraud has cost American taxpayers tens of billions of dollars. Republicans warned that COVID unemployment programs were highly vulnerable to fraud, yet almost every Democrat voted to extend these programs, without holding a single oversight investigation. We cannot let these crimes continue to go unchecked, so we are introducing this legislation that will help prevent fraud on the front end, make it easier to recuperate fraudulently paid dollars, and provide relief to victims of unemployment fraud. Congress must act now to reign in fraud and protect hardworking taxpayers,” said Rep. McCarthy.
“Given the major surge in fraud that has occurred in unemployment programs nationwide, legislation aimed at preventing and detecting fraud is warranted and timely. This bill will prevent fraud in COVID unemployment programs, recover fraudulently paid benefits, and provide relief for taxpayers and victims of unemployment fraud,” said Sen. Crapo.
“Enhanced federal unemployment benefits are not only hurting our economic recovery – they’re turning Americans into easy prey for fraudsters and criminals. Rampant unemployment fraud has cost taxpayers as much as $200 billion and exposed countless workers and families to identity theft and financial harm. Yet Democrats refuse to hold even a single hearing on how to stop it. This commonsense bill will protect workers, families, and small businesses by adding safeguards on the front end to prevent fraud before it occurs and strengthening efforts to recover stolen funds after the fact,” said Rep. Walorski.
- Prevents fraud on the front end. Requires verification of identity, earnings, and prior employment of applicants prior to authorizing benefits and allows States to claim reimbursement for administrative expenses to improve identity verification.
- Supports claw back of fraudulently paid dollars. Establishes the joint COVID Unemployment Fraud Taskforce and incentivizes States to go after fraud by allowing them to retain 5% of recovered funds.
- Provide relief to victims of unemployment fraud and identity theft. The bill implements protections for taxpayers and victims of unemployment fraud.
Ways and Means Republican original co-sponsors of the bill include: Rep. Tom Reed (R-NY), Rep. Jackie Walorski (R-IN), Rep. Mike Kelly (R-PA), Rep. Tom Rice (R-SC), Rep. Lloyd Smucker (R-PA), Rep. Carol Miller (R-WV), Rep. Brad Wenstrup (R-OH), Rep. David Schweikert (R-AZ), Rep. Darin LaHood (R-IL), Rep. Drew Ferguson (R-GA), Rep. Devin Nunes (R-CA), Rep. Kevin Hern (R-OK), Rep. Ron Estes (R-KS), and Rep. Adrian Smith (R-NE).
CLICK HERE for a one-page summary.
CLICK HERE for a section-by-section summary.
CLICK HERE for bill text.
Background on California’s EDD fraud:
As part of COVID relief efforts, PUA was established last year by Congress to provide federal funding to states to help support the availability of unemployment insurance. PUA provides additional benefits to individuals who usually wouldn’t be eligible for unemployment benefits, such as independent contractors or gig workers. An estimated $20 billion in potentially fraudulent unemployment payments are still under investigation. California State Auditor Elaine Howle reported last month in an audit that the federal government warned California multiple times about the threat of fraud, but states California continued “to pay claims despite having evidence that they are very likely fraudulent.”
In an attempt to reduce fraud on December 31, 2020, the EDD suspended the processing of roughly 1.4 million unemployment benefits claims in order to verify the identities of claim applicants. This was done with no warning to those whose benefits had been suspended. Since then there has been little follow-up clarification on which claims were found to be fraudulent and which were legitimate, or how EDD is making such determinations. In addition, the EDD has recently confirmed that the backlog of Californians who are still waiting for their benefits claims to be processed remains at roughly 900,000 individuals.
Unchecked unemployment fraud is delaying legitimate payments, diverting funds away from unemployed workers, and turning thousands of Americans into unwitting identity theft victims.
Top officials at the Labor Department estimate that at least $63 billion, and as much as $89 billion, in unemployment benefits have been improperly paid since March 2020, largely due to fraud. The true amount is unknown. Officials at ID.me estimate it could be as much as $200 billion based on their digital identity proofing technology.
As far back as Summer 2020, multiple reports from the Department of Justice, the U.S. Secret Service and GAO have raised the alarm bells about widespread fraud resulting in billions being diverted.
Democrats extended COVID unemployment programs through Sept. 6th, 2021 with no additional protections against fraud -- and without having held a single hearing to determine how to prevent further fraud from occurring.
Republicans have been sounding the alarm on the rampant fraud and abuse in COVID unemployment programs for months. Calls for hearings have gone ignored, and while Democrats are sabotaging our jobs recovery, criminals are lining their pockets with billions in taxpayer funds.
Rep. Devin Nunes (R-CA) proposed an amendment that would require states to verify identity and receive documentation of prior wages of applicants for Pandemic Unemployment Assistance (PUA) before authorizing benefits.
Early in May, Rep. Brady and Sen. Crapo sent a letter urging the U.S. Department of Labor Secretary to implement targeted, timely investments to stop fraud now.
Also in May, Republican Leader for the Worker and Family Support Subcommittee Rep. Jackie Walorski hosted a panel with Ways and Means Republicans addressing the over $60 billion and counting in fraud.