Protecting Taxpayers and Victims of Unemployment Fraud Act
Floor Speech
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Mr. SMITH of Missouri. Mr. Speaker, pursuant to House Resolution 383, I call up the bill (H.R. 1163) to provide incentives for States to recover fraudulently paid Federal and State unemployment compensation, and for other purposes, and ask for its immediate consideration.
The Clerk read the title of the bill.
Mr. Speaker, this crucial legislation will finally protect taxpayers and victims of fraud against the largest theft of tax dollars in American history.
Americans are suffering under a cost-of-living crisis fueled by Democrats' reckless spending. It has brought us to the brink of recession and spurred the highest increase in interest rates in 16 years.
It must be infuriating for folks to also see that it is not just the American Dream that is being stolen from them but their identities and their tax dollars.
Criminal organizations and foreign fraudsters exploited the pandemic to steal hundreds of billions in payments intended to keep workers afloat amidst government lockdowns, and the victims need our help.
How much has been stolen? The Department of Labor inspector general told the Ways and Means Committee that taxpayers may be on the hook for at least $191 billion in improper payments, and that is just the lower estimate. Outside experts estimate up to $400 billion of improper payments.
While working Americans were trying to piece their lives back together during the pandemic, Democrats did nothing to fight fraud. When Democrats held the majority on Ways and Means, they ignored, blocked, and shot down commonsense safeguards and refused to hold even one hearing on this fraud.
That inaction made it clear that their soft-on-crime agenda does not just apply to carjackings and looting department stores. It applies to defrauding the Federal Government, as well.
During his State of the Union, President Biden said the watchdogs are back. He rolled out the position of chief pandemic prosecutor at the Department of Justice. Since then, even as we have discovered more instances of fraud, the Biden administration official responsible for prosecuting it has resigned, and the position sits vacant for months.
That is not accountability. We couldn't afford inaction for the last 2 years, and we can afford it even less today.
These are stolen tax dollars, which makes every person in America a victim of this fraud. Today's vote is an important step toward ending suffering and delivering accountability.
The Protecting Taxpayers and Victims of Unemployment Fraud Act gives States the tools they need to go after fraudsters and shores up vulnerabilities by improving identity verification and modernizing State UI systems.
It allows States to retain 25 percent of fraudulent Federal funds recovered. This is a real incentive for States to pursue what can be costly investigations and prosecutions because now they can use recovered funds to improve UI program integrity and fraud prevention. These dollars can go toward hiring investigators and prosecutors to go after criminals to recover fraud payments. This will also give States the resources to modernize systems and technology to better verify identity and income for unemployment and deter, detect, and prevent improper payments.
This legislation also allows States to keep 5 percent of UI overpayments recouped in the future to continue to improve benefit delivery and eligibility verification. This includes matching State lists against databases, which will help reduce payments to deceased and incarcerated individuals.
Many of these reform ideas are bipartisan and very long overdue. Some are supported by the Department of Labor inspector general and were even included in past budget requests from President Trump and President Obama. Even Biden has included several of the ideas in the Protecting Taxpayers and Victims of Unemployment Fraud Act in his most recent budget request.
I am hopeful House Democrats will join here to also protect taxpayers and support this bill.
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Mr. SMITH of Missouri. Tenney).
My colleagues on the other side have noted their objection to this bill's rescission of unobligated COVID funds sitting unused at the Department of Labor. They claim these funds are important in combating UI fraud, but the reality couldn't be further from the truth.
Mr. Speaker, I include in the Record a February letter from the Missouri Department of Labor and Industrial Relations. Department of Labor & Industrial Relations, Jefferson City, MO, February 6, 2023. Hon. Jason Smith, Chair, House Ways and Means Committee, Washington, DC.
Dear Chairman Smith: Thank you for the opportunity to share the Missouri Department of Labor & Industrial Relations, Division of Employment Security's experience in administering and combatting fraud in the unemployment insurance (UI) and federal CARES Act programs throughout the duration of the COVID-19 pandemic.
Missouri's Governor declared a state of emergency on March 13, 2020, and Missouri entered into an agreement with the United States Department of Labor (USDOL) to administer the federal CARES Act program on March 28, 2020. In a span of only three weeks, Missouri realized an increase of over 3000% in unemployment insurance claims. In addition to the historic increase in workload, the combination of state and new federal programs expanding eligibility and dramatically increasing monetary benefits, rapidly evolving federal guidance, rampant media coverage, and misinformation made for an extremely challenging environment for program administration.
Federal programs, such as Pandemic Unemployment Assistance (PUA), initially only required self-attestation to qualify and allowed individuals to backdate their PUA claims, lacked the checks and balances inherent within the state's regular Unemployment Insurance program that are a key component of program integrity. Additionally, eligibility for a single dollar of benefit under any unemployment program automatically qualified the individual to receive a substantial supplemental Federal Pandemic Unemployment Compensation (FPUC) payment, inviting and incentivizing individuals and bad actors to attempt to collect benefits to which they were not entitled. Constantly changing guidance for the CARES Act programs added to the burden by creating additional workloads, complexity and confusion. For example, PUA guidance from the USDOL was amended four times in a period of less than 6 months, and much of the amended guidance applied retroactively to the beginning of the pandemic assistance period for claims already processed.
Fortunately, in 2016 Missouri replaced its legacy mainframe system with a modernized unemployment insurance application. Prior to the pandemic, Missouri had existing identity verification and fraud detection tools in place. This gave Missouri the ability to address the CARES Act program implementation challenges and successfully identify potential threats and prevent both small and large-scale fraud attacks that plagued some states, with nationwide estimates of potential fraud overpayments exceeding $45 billion according to the USDOL--Office of Inspector General (OIG). However, in response to unprecedented fraud attacks, Missouri continuously reviewed and modified its fraud detection tools and methods. As a result, funding administered by the USDOL for improved program integrity was mostly leveraged for the provision of additional staffing resources to address the increased volume of work and support enhancement of the existing technologies.
More recent funding opportunities, such as the Equity and Tiger Teams grants, provide limited flexibility to address program integrity and ongoing fraud prevention strategies. The Equity Grant is focused on improving recipiency and equitable access to the UI program. The Tiger Teams grant identifies three focus areas to be addressed, ``equity and access, backlogs and timeliness, and integrity.'' Bad actors are constantly striving to find new innovative ways to defraud benefit programs and avoid detection. As such, Missouri must continue to innovate and invest in fraud prevention strategies and tools that prevent our states and our citizens from becoming the next victims. The existing use, at the federal level, of the Resource Justification Model for funding UI administration and one-time grant opportunities, fall short in meeting this need. Therefore, prioritization should be given to consistent funding that not only permits states to implement proven strategies and tools to combat fraud but also provides states the ability to support and maintain these solutions into the future.
Missouri will continue to place UI program integrity as a critical priority. I appreciate this opportunity to share Missouri's experience with the challenges we faced administering the federal programs throughout the pandemic. Sincerely, Anna S. Hui, Department Director.
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Mr. SMITH of Missouri. In it, my State's workforce directory notes their experience with tiger teams.
It says: ``More recent funding opportunities, such as the equity and tiger team grants, provide limited flexibility to address program integrity and ongoing fraud prevention strategies.''
This doesn't sound like a glowing review.
I welcome Democrats to share any information that they have that the Department of Labor's efforts have helped us recover dollars for American taxpayers.
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Mr. SMITH of Missouri. Malliotakis).
Democrats are falsely claiming that this bill claws back relief funds from Americans who received an overpayment through no fault of their own.
The language in this bill is crystal clear. It is focused on recovering overpayments due to fraud. That means intent on the part of the individual. Existing law already protects individuals who receive overpayments through administrative error or otherwise. In fact, section 2401 of the CARES Act allows States to waive overpayments on a case-by-case basis if the payment would be contrary to equity and good conscience.
This bill also explicitly states in section 2(a)(2) and section 2(a)(3) that ``the State agency may retain 25 percent of any amount recovered from overpayments of pandemic emergency unemployment compensation''--this is the one you need to understand--``that were determined to be made due to fraud.'' Not overpayment. Due to fraud.
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Mr. SMITH of Missouri. Mr. Speaker, I am prepared to close, and I reserve the balance of my time.
The only way that this bill punishes American families are American families who are fraudsters, American families who intentionally create and commit fraud. Give me a break.
After years of inaction when Democrats held the majority, taxpayers have lost anywhere from $191 billion upward to $400 billion in fraud, and their identities have been stolen.
Democrats ignored it. They blocked it, and they shot down commonsense safeguards. Guess what? They refused to hold even one hearing on fraud.
American workers, families, and small businesses are already dealing with a cost-of-living crisis, and they deserve better. That is why they elected a Republican majority on the promise of a government that is accountable.
Today's bill delivers on that accountability with commonsense reforms that empower the States to make things right. With this vote, we will end the greatest theft of taxpayer dollars in American history.
Mr. Speaker, I urge my colleagues on both sides of the aisle to do the right thing and vote in favor of this bill and against fraud.
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