Sneak Preview: OIG Finds States Struggle To Limit PUA Program Fraud

Jerry Ashworth
November 13, 2020 at 08:29:54 ET
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(The following was excerpted from a recent Thompson Grants 360 article.) States are facing challenges in administering the self-certification requirements under the Pandemic Unemployment Assistance (PUA) program created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136), making it difficult for them to detect and avoid fraud, according to a recent audit by the Department of Labor (DOL) Office of Inspector General (OIG).

The CARES Act’s PUA program expands DOL’s Unemployment Insurance (UI) eligibility to individuals who are not typically eligible to obtain UI benefits, and temporarily expands unemployment benefits for workers affected by the COVID-19 pandemic. The CARES Act provides for up to 39 weeks of PUA benefits and requires individuals to self-certify that they lost employment income due to a COVID-19 related reason. Individuals seeking assistance under the PUA program can self-certify to their state workforce agencies that they qualify for program benefits for reasons such as: (1) their place of employment was closed as a direct result of the COVID-19 pandemic; (2) they are unable to reach their place of employment due to COVID-19; (3) they were diagnosed with COVID-19 or experienced symptoms and are seeking a medical diagnosis; or (4) they are providing care for a family or household member diagnosed with COVID-19.

In its audit, OIG sought to determine what steps states were taking to prevent fraud related to PUA self-certification and received responses from 45 states participating in the program. While each of the states that responded told OIG that they have implemented processes for applicants to self-certify for PUA benefits, 44 of the states noted that they faced challenges such as having a lack of resources to address the high volume of claims, untimely and unclear guidance from DOL’s Employment and Training Administration (ETA) and incompatible legacy systems.

“Because of the historically high volume of UI claims due to COVID-19, it is not surprising that the shortage of resources tops the challenges that most states faced in implementing the PUA program,” OIG explained. “The time constraints states were working under to implement the new UI programs poised another challenge as many of them struggled to pay benefits in a timely manner. [In addition,] most states had to bring up new IT systems to implement PUA that were not compatible with legacy systems.”

Using Other Resources

Further, the audit explained that ETA guidance sent to states in May strongly recommended that states cross-match the self-certifications with state and national databases (e.g., Social Security Administration, Interstate Benefits, State Directory of New Hires). However, DOL’s Solicitor’s Office asserted that states have no authority to require claimants to provide documentation of wages earned or income verification. In the audit, 26 of the states that responded said they use PUA eligibility requirements beyond self-certification, such as wage documentation and cross-matching with other identity verification databases. “Despite implementing these steps and complying with the self-certification and fraud messaging requirements, 98% of states reported they still faced challenges,” OIG said.

(The full version of this story has now been made available to all for a limited time here.)

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