“The enormous expansion of UI [unemployment insurance] benefits by more than $260 billion dollars under the CARES Act also substantially increases fraud risk, with criminals easily exploiting system vulnerabilities,” Dahl told a House Oversight subcommittee. “This Department has estimated that about 10% of the UI payments are improper under the best of times. We are in the worst of times.”
It is typical under a crisis for taxpayer dollars to be wasted because the urgency to provide funding often overrides any attempt to do this with proper oversight but Dahl made the case the current situation was worse than usual because the CARES Act basically works on the honor system.
To establish eligibility for benefits, a person simply asserts that they have lost employment income due to a COVID-19 related reason. This “self-certification,” to use the department’s term, is as simple as checking a box to make someone eligible to receive payments as soon as they can be processed.
Individuals applying for benefits under the CARES Act Pandemic Unemployment Assistance are required to provide documentation that they lost wages. There is, however, no apparent penalty if they don’t, Dahl noted in a letter last week to the committee. “[A]ny individual may initially self-certify without evidence of wages earned and be approved for payment in accordance with the state’s UI regulations. If the individual fails to provide documentation within 21 days, they are not rendered ineligible for PUA benefit.”
The Trump administration established broad certification rules in order to cover people who might fall outside of regular unemployment eligibility, such as gig workers, freelancers, and even clergy. Labor Secretary Eugene Scalia told CEI last week that he went beyond the instructions Congress put in the act to provide relief to those groups, deeming it necessary to address the full extent of the crisis.
Dahl said his office was “aggressively pursuing” more than 300 investigations into fraud. These investigations include the alleged identity theft of more than three dozen health care workers while they were providing emergency services related to the outbreak.