UIPL_22-21_acc.pdf

ETA Advisory File Text

EMPLOYMENT AND TRAINING ADMINISTRATION ADVISORY SYSTEM U.S. DEPARTMENT OF LABOR Washington D.C. 20210 CLASSIFICATION Unemployment Insurance CORRESPONDENCE SYMBOL OUI DPM DATE August 11 2021 RESCISSIONS None EXPIRATION DATE Continuing ADVISORY UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 22 -2 1 TO STATE WORKFORCE AGENCIES FROM SUZAN G. LEVINE s Acting Assistant Secretary SUBJECT Grant Opportunity to Support States with Fraud Detection and Prevention Including Identity Verification and Overpayment Recovery Activities in All Unemployment Compensation UC Programs 1. Purpose. To notify State Workforce Agencies regarding the availability of up to 140 million to support states with fraud detection and prevention including identity verification and overpayment recovery activities in all UC programs.2. Action Requested. The U.S. Department of Labor s Department Employment and Training Administration ETA requests that State Workforce Agency Administrators Review the funding opportunity t o determine if the state will apply for funds under this solicitation Coordinate with appropriate state staff to develop a SF-424 under this solicitation Submit the SF-424 by e-mail to covid-19 dol.gov by the close of business on September 13 2021 with an electronic copy to the appropriate regional office. The subject line of the e-mail should include the name of the state and the title ARPA Fraud Prevention Grant 2021. 3. Summary and Background.a. Summary The Department is making up to 140 million available for grants to states to support states with fraud detection and prevention including identity verification and overpayment recovery activities in all UC programs. States may use the funds made available under this UIPL to support innovative strategies and solutions to 1 strengthen identity verification of Unemployment Insurance UI claimants 2 enhance fraud detection and prevention strategies 3 improve data management and analytic capabilities 4 increase cybersecurity and 5 expand overpayment recovery efforts. 2 Additionally as a condition of receiving a grant under this UIPL states must agree to information disclosure with the Department s Office of Inspector General DOL-OIG as described in Section 5.c.i. of this UIPL. b. Background Since the onset of the Coronavirus Disease 2019 COVID-19 pandemic the UI program has been an attractive target for international and domestic criminal organizations perpetrating identity fraud. States have worked tirelessly to combat relentless and sophisticated fraud attacks while simultaneously responding to the highest claims workload in the history of the UI program. On March 11 2021 the President signed the American Rescue Plan Act of 2021 ARPA into law Public Law Pub. L. 117-2 . Section 9032 ARPA creates a new Section 2118 of the Coronavirus Aid Relief and Economic Security CARES Act Pub. L. 116-136 and provides for a 2 000 000 000 appropriation to the Secretary of Labor Secretary to detect and prevent fraud to promote equitable access and to ensure timely payment of benefits to eligible workers with respect to UC programs. Such funds may be used for federal administrative costs system-wide infrastructure investment and development and to make grants to states or territories administering UC programs for such purposes including the establishment of procedures or the building of infrastructure to verify or validate identity implement federal guidance regarding fraud detection and prevention and accelerate claims processing or process claims backlogs due to the pandemic. Addressing both eligibility fraud and identity fraud remain a top priority for the Department and the entire UC system. As discussed in UIPL Nos. 23-20 28-20 28-20 Change 1 and 28-20 Change 2 ETA strongly encourages states to adopt an array of solutions and techniques to detect and fight fraud to have robust strategies in place to verify the identity of individuals applying for unemployment benefits and to strengthen efforts to recover overpayments including fraudulently paid UC benefits. This includes implementing National Institute of Standards and Technology NIST -compliant1 Identity Assurance Level 2 IAL2 and Authenticator Assurance Level 2 AAL2 identity proofing see section 4.b. of this UIPL for more information . States are also encouraged to make use of the tools resources and services of the UI Integrity Center funded by the Department and operated in partnership with the National Association of State Workforce Agencies NASWA . See Training and Employment Notice TEN No. 04-20 for further information on the Integrity Data Hub IDH . As a reminder states must refer allegations which they reasonably believe constitute UC fraud waste abuse mismanagement or misconduct to the DOL-OIG. Additionally states are required to disclose confidential UC information related to the CARES Act as amended to the DOL-OIG for the purpose of UC fraud investigations and audits for the entire pandemic relief period. See UIPL No. 04-17 Change 1. States should also 1 NIST Special Publication SP 800-63 provides technical requirements for implementing digital identity services. The publication includes an overview of identity frameworks using authenticators credentials and assertions in a digital system and a risk-based process to select assurance levels at https pages.nist.gov 800-63-3 sp800-63- 3.html. 3 actively and regularly share information about suspected fraud with other state UI agencies and with local state and federal law enforcement. ETA is committed to supporting states by providing funding and investing in the most innovative and successful tools and resources to stay ahead of fraud schemes which includes providing states with options to access NIST-compliant identity proofing and authentication solutions. This includes Blanket Purchase Agreements BPAs awarded by the Department that provide the Department with a procurement vehicle to enhance identity proofing in the state s UI programs. In the near future the Department plans to issue guidance to states on the BPAs and the procedures for the Department to issue orders under those BPAs in accordance with federal procurement regulations. As part of that ordering process the Department anticipates working with states to identify particular requirements applicable to a state UI program and to provide for the payment for services ordered using grants made available under this UIPL or another funding source identified by the state subject to requirements of federal appropriations law. Promoting Program Equity. As states consider additional tools to incorporate into their fraud management operations equitable access to unemployment benefits must be at the forefront of the decision-making process in line with Executive Order EO 13985 of January 2021 and UIPL Nos. 02-16 and 02-16 Change 1. At the most fundamental level equity within the UC program means the provision of UC payments to eligible workers regardless of one s background in a timely and fair manner with an application process that is readily accessible to all workers. In the context of fraud management equitable access means that there are alternatives to digital mechanisms of identity proofing that the mechanisms used to prove identity or flag for fraud do not contain racial gender or other bias and that data is available to understand the impact of fraud mitigation on eliminating barriers that prevent full and equal access to benefits for all eligible individuals. In the near future the Department expects to issue additional funding opportunities for promoting equitable access and ensuring the timely payment of benefits with respect to UC programs. States may want to consider these additional funds when preparing their strategies to detect and prevent fraud under this UIPL. 4. Guidance. This section provides definitions for different types of fraud namely eligibility fraud and identity fraud. States are encouraged to implement NIST-compliant processes for identity proofing and authentication to combat identity fraud. a. Types of Fraud. There are primarily two different types of fraud occurring within the UC program. i. Eligibility fraud generally occurs when benefits or services are acquired as a result of false information with the intent to receive benefits for which an individual or individuals would not otherwise be qualified. State law determines how this is evaluated within the UC program. Not all improper payments are considered fraudulent. 4 ii. Identity fraud is when one person acquires and uses the identifying information of another person in order to illegally receive benefits. The fraud can happen either at the time of UI application submission or by changing key user data like bank account information after a claim has been established. As discussed in UIPL No. 16-21 synthetic identity fraud occurs when real and fake information are combined to create false identities. b. National Institute of Standards and Technology NIST -compliant IAL2 AAL2 Identity Proofing and Authentication. The Department strongly encourages all states to implement NIST-compliant identity proofing specifically IAL2 and AAL2 before claimants start filling out the UI claims application and for re-accessing their account. IAL2 and AAL2 are recommended for UC programs due to the personally identifiable information PII collected from individuals and employers. NIST Standard Publication SP 800-63 outlines components of identity assurance that states should take into consideration when reviewing available tools solutions i. Identity Assurance Level IAL indicates how robust the identity proofing process is and how the identity in question is bound between an authenticator and a specific person. IAL2 requires evidence that supports the real-world existence of the claimed identity and verifies that the applicant is appropriately associated with this real-world identity. IAL2 introduces the need for either remote or physically- present identity proofing and includes filling out personal information name address DOB etc. and submitting photos of approved government-issued identification or supporting documents for remote identity proofing. ii. Authenticator Assurance Level AAL refers to the authentication process and indicates the confidence that the person trying to log in is the same person as the person attached to the account. AAL2 indicates the level of security behind the point of access which requires the proof of possession and control of two distinct authentication methods. As states are implementing NIST-compliant IAL2 AAL2 identity proofing and authentication services or other identity verification methods the Department strongly encourages states to include service delivery expectations that mitigate access barriers to individuals. The state must provide at least two options to individuals upfront to verify their identity i.e. online by phone and or in-person . An example of service delivery expectations that further mitigate access barriers include that incorrect identity proofing by denying the validation of an individual s identity who has accurately represented themselves and submitted to identity proofing requirements which is an example of a false positive shall not exceed 0.5 percent of the total IAL2 identities processed. Timely determinations prevent fraudulent benefit payments while ensuring that qualified and eligible claimants receive benefits as soon as administratively feasible. See UIPL Nos. 04-01 01-16 and 16-21. 5 5. Funding for States to Combat Fraud in All UC Programs. This section discusses the amount available to states allowable uses of funds application instructions and reporting requirements. a. Amount Available to States.2 The Department is providing a total of up to 140 million to states to combat fraud in all UC programs. The methodology for state funding levels is based on size of UI covered employment in the state. For purposes of this methodology states are assigned to four groups Small Medium Large and Extra-Large based on the 12-month average of UI covered employment for the four quarters in calendar year 2020 reported on the ES 202 Employment Wages and Contributions . States are assigned to the size groups as follows Small covered employment under 1 million employees Medium covered employment between 1 million and 2 million employees Large covered employment between 2 million and 7 million employees Extra Large covered employment greater than 7 million employees Attachment I lists funding available for each state. b. Allowable Use of Funds. States may use the funds made available under this UIPL to strengthen identity verification of UI claimants enhance fraud detection and prevention strategies improve data management and analytic capabilities increase cybersecurity and expand overpayment recovery efforts in all UC programs. Examples of permissible uses of these funds include but are not limited to the following activities i. Procuring implementing and paying reoccurring subscription costs and or ongoing maintenance costs of identity verification and fraud detection solutions such as NIST-compliant IAL2 and AAL2 tool s strategy ies that provide identity verification and user authorization of all individuals applying for UC benefits. This includes using such funds to pay for services provided under an order issued by the Department against one of the Department s identity proofing BPAs ii. Implementing or enhancing data analytics capabilities to understand the nature and prevalence of fraud and the impact of fraud mitigation efforts such as tracking o Current and historical numbers of cases flagged as potential or resolved fraud o Type of fraud eligibility fraud vs. identity fraud o Type of perpetrators and o Investigation outcomes. 2 Since Guam American Samoa the Commonwealth of the Northern Mariana Islands the Federated States of Micronesia the Republic of the Marshall Islands and the Republic of Palau do not operate regular UC programs this grant opportunity is not being made available to these jurisdictions. 6 iii. Implementing cross-matching to detect suspicious activity including synthetic or false identities and identification of other patterns of fraudulent behavior e.g. with a state s own internal data or the IDH Identity Verification IDV solution iv. Implementing or enhancing cybersecurity perimeter defense for the websites and web applications responsible for initial application steps and regular certification e.g. to protect against online bot attacks v. Costs incurred from working with banks and financial institutions to detect suspicious activity ensure that accounts are not unduly suspended and eligible claimants with suspended claims are paid benefits and facilitate the expeditious return of improperly paid UC funds vi. Costs incurred to capture and analyze additional data elements to measure the service delivery expectations. This includes capturing any data elements to measure effectiveness and equity outcomes of identity verification and fraud detection and prevention solutions tools and actions associated with the use of these funds to ensure that service delivery does not adversely affect people of color individuals in poverty and others who may have been historically underserved or marginalized. Examples include tracking which claims were flagged as potential fraud at any time the length of time to resolve these investigations and the outcome of these investigations e.g. fraud overpayment but not fraudulent non-issue i.e. false positive by demographic group. Other examples include reporting data on claimant experience with fraud fighting technology e.g. speed of identity proofing broken out by subgroups such as race ethnicity gender disability status geographic location age . vii. Assessing and mitigating disproportionate impact of fraud measures on vulnerable communities such as communities of color communities with disabilities limited English proficient and immigrant communities and certain geographic communities e.g. rural versus urban . viii. Assessing and mitigating security vulnerabilities e.g. migrating from using PINs to strong passwords locking accounts after multiple failed login attempts immediately notifying users when key account information like when a mailing address or bank account is modified ix. Hiring staff or obtaining contract services to conduct fraud investigations other eligibility fraud and identity fraud detection-related activities and support overpayment recovery efforts 3 3 Refer to UIPL No. 12-01 Change 2 for states ability to exercise flexibility in staffing models after the emergency flexibilities under Section 9015 ARPA expire on September 6 2021. 7 x. Costs incurred as a result of a state s participation in forfeiture and seizure efforts of law enforcement agencies e.g. Department of Justice United States Secret Service and xi. Administrative expenses incurred by the state to gather business requirements program computer systems or otherwise implement tools strategies or solutions to strengthen fraud detection prevention and recovery efforts. c. Requirement to Receive Funding. i. Required Disclosure to DOL-OIG. As discussed in UIPL No. 04-17 Change 1 states must refer allegations which they reasonably believe constitute UC fraud waste abuse mismanagement or misconduct to the DOL-OIG. Additionally states are required to disclose confidential UC information related to the CARES Act as amended to the DOL-OIG for the purpose of UC fraud investigations and audits for the entire pandemic relief period which for most states will be weeks of unemployment beginning after January 27 2020 through weeks of unemployment ending before September 6 2021. As a condition of receiving funding through this solicitation the state must agree to provide all confidential UC information to DOL-OIG for purposes of both investigating fraud and performing audits through weeks of unemployment ending before December 31 2023. States may use funds awarded under this UIPL UI administrative grant under Section 302 a SSA or another source of funding to pay for this disclosure. See 20 C.F.R. 603.8 b . d. Application Instructions. States are required to submit an SF-424 OMB No. 4040-0004 https apply07.grants.gov apply forms sample SF424 4 0-V4.0.pdf . ETA encourages states to submit this form as soon as possible but no later than September 13 2021 by electronic submission to the ETA National Office at covid-19 dol.gov with a copy to the appropriate ETA Regional Office. For additional information on completing the SF- 424 please refer to Attachment II. In order to attest compliance with the requirement to receiving this funding under section 5.c.i. of this UIPL states should check the I AGREE box under Item 21 and include the appropriate language in Item 15 as indicated in the instructions for completing the SF- 424. Additionally please note that states should maintain any supporting documentation that serves as evidence for meeting this requirement in this UIPL. 8 e. Reporting Requirements. States must provide a narrative Quarterly Progress Report ETA 9178-ARPA and Quarterly Financial Report ETA 9130 containing updates on the progress and implementation of each grant project. The form ETA 9178-ARPA is provided as Attachment III. ETA will use the ETA 9178-ARPA report to track each state s progress in addressing fraud with ARPA funds ensuring that a state s use of funds is consistent with the permissible solutions activities outlined in section 5.b. of this UIPL and ensuring fraud prevention solutions activities do not have a negative impact on access to benefits. States must provide ETA with an ETA 9178-ARPA narrative update that identifies the specific issue a state s proposed solutions activities will impact to report specific outcome metrics as they relate to the solutions activities including service delivery expectations that mitigate access barriers to individuals see section 4.b. of this UIPL . Please refer to Attachment III for instructions for completion and the timeline of submission for the ETA 9178-ARPA. A note for states participating in the Department s identity proofing BPAs. States that participate in the Department s identity proofing BPAs may be subject to additional terms and conditions. The terms and conditions of any grant issued in accordance with this UIPL shall be read in harmony with and as complementary to the terms and conditions set forth in the identity proofing order and corresponding BPA. 5. Inquiries. Please direct inquiries to covid-19 dol.gov with a copy to the appropriate ETA Regional Office. 6. References. American Rescue Plan Act of 2021 ARPA including Title IX Subtitle A Crisis Support for Unemployed Workers Pub. L. 117-2 Consolidated Appropriations Act 2021 including Division N Title II Subtitle A the Continued Assistance for Unemployed Workers Act of 2020 Pub. L. 116-260 Coronavirus Aid Relief and Economic Security CARES Act Pub. L. 116-136 Title II Subtitle A Relief for Workers Affected by Coronavirus Act Section 303 of the Social Security Act 42 U.S.C. 503 Executive Order 13985 of January 20 2021 86 FR 7009 page 7009-7013 https www.federalregister.gov documents 2021 01 25 2021-01753 advancing- racial-equity-and-support-for-underserved-communities-through-the-federal- government UIPL No. 19-21 Benefits Held by Banks and Financial Institutions as a Result of Suspicious and or Potentially Fraudulent Activity and the Proportional Distribution Methodology Required for Recovering Returning Federally Funded Unemployment Compensation UC Program Funds issued May 04 2021 https wdr.doleta.gov directives corr doc.cfm docn 9571 UIPL No. 16-21 Identity Verification for Unemployment Insurance UI Claims issued April 13 2021 https wdr.doleta.gov directives corr doc.cfm DOCN 9141 9 UIPL No. 14-21 Change 1 State Responsibilities After the Temporary Unemployment Benefit Programs under the Coronavirus Aid Relief and Economic Security CARES Act as amended End Due to State Termination of Administration or When the Programs Expire issued July 12 2021 https wdr.doleta.gov directives corr doc.cfm docn 9502 UIPL No. 14-21 American Rescue Plan Act of 2021 ARPA - Key Unemployment Insurance UI Provisions issued March 15 2021 https wdr.doleta.gov directives corr doc.cfm DOCN 5669 UIPL No. 09-21 Continued Assistance for Unemployed Workers Act of 2020 Continued Assistance Act - Summary of Key Unemployment Insurance UI Provisions issued December 30 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 3831 UIPL No. 28-20 Change 2 Additional Funding to Assist with Strengthening Fraud Detection and Prevention Efforts and the Recovery of Overpayments in the Pandemic Unemployment Assistance PUA and Pandemic Emergency Unemployment Compensation PEUC Programs as well as Guidance on Processes for Combatting Identity Fraud issued August 11 2021 https wdr.doleta.gov directives corr doc.cfm DOCN 7207 UIPL No. 28-20 Change 1 Additional Funding for Identity Verification or Verification of Pandemic Unemployment Assistance PUA Claimants and Funding to Assist with Efforts to Prevent and Detect Fraud and Identity Theft as well as Recover Fraud Overpayments in the PUA and Pandemic Emergency Unemployment Compensation PEUC Programs issued January 15 2021 https wdr.doleta.gov directives corr doc.cfm DOCN 9897 UIPL No. 28-20 Addressing Fraud in the Unemployment Insurance UI System and Providing States with Funding to Assist with Efforts to Prevent and Detect Fraud and Identity Theft and Recover Fraud Overpayments in the Pandemic Unemployment Assistance PUA and Pandemic Emergency Unemployment Compensation PEUC Programs issued August 31 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 8044 UIPL No. 23-20 Program Integrity for the Unemployment Insurance UI Program and the UI Programs Authorized by the Coronavirus Aid Relief and Economic Security CARES Act of 2020 - Federal Pandemic Unemployment Compensation FPUC Pandemic Unemployment Assistance PUA and Pandemic Emergency Unemployment Compensation PEUC Programs issued May 11 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 4621 UIPL No. 16-20 Change 5 Expanded Eligibility Provisions for the Pandemic Unemployment Assistance PUA Program issued February 25 2021 https wdr.doleta.gov directives corr doc.cfm DOCN 3202 UIPL No. 16-20 Change 4 Continued Assistance to Unemployed Workers Act of 2020 Pandemic Unemployment Assistance PUA Program New Operating Instructions and Reporting Changes issued January 8 2021 https wdr.doleta.gov directives corr doc.cfm DOCN 6973 UIPL No. 16-20 Change 3 Coronavirus Aid Relief and Economic Security CARES Act of 2020 - Eligibility of Individuals who are Caregivers for Pandemic Unemployment Assistance PUA in the Context of School Systems Reopening issued August 27 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 3849 10 UIPL No. 16-20 Change 2 Coronavirus Aid Relief and Economic Security CARES Act of 2020 - Pandemic Unemployment Assistance PUA Additional Questions and Answers issued July 21 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 5479 UIPL No. 16-20 Change 1 Coronavirus Aid Relief and Economic Security CARES Act of 2020 Pandemic Unemployment Assistance PUA Program Reporting Instructions and Questions and Answers issued April 27 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 5899 UIPL No. 16-20 Coronavirus Aid Relief and Economic Security CARES Act of 2020 Pandemic Unemployment Assistance PUA Program Operating Financial and Reporting Instructions issued April 5 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 4628 UIPL No. 14-20 Coronavirus Aid Relief and Economic Security CARES Act of 2020 Summary of Key Unemployment Insurance UI Provisions and Guidance Regarding Temporary Emergency State Staffing Flexibility issued April 2 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 3390 UIPL No. 04-17 Change 1 Requirement for States to Refer Allegations of Unemployment Compensation UC Fraud Waste Abuse Mismanagement or Misconduct to the Department of Labor s Department Office of Inspector General s DOL-OIG and to Disclose Information Related to the Coronavirus Aid Relief and Economic Security CARES Act to DOL-OIG for Purposes of UC Fraud Investigation and Audits issued August 3 2021 https wdr.doleta.gov directives corr doc.cfm DOCN 5817 UIPL No. 02-16 Change 1 State Responsibilities for Ensuring Access to Unemployment Insurance Benefits Services and Information issued May 11 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 5491 UIPL No. 02-16 State Responsibilities for Ensuring Access to Unemployment Insurance Benefits issued October 01 2015 https wdr.doleta.gov directives corr doc.cfm DOCN 4233 UIPL No. 01-16 Change 1 Federal Requirements to Protect Claimant Rights in State Unemployment Compensation Overpayment Prevention and Recovery Procedures - Questions and Answers issued January 13 2017 https wdr.doleta.gov directives corr doc.cfm DOCN 7706 UIPL No. 01-16 Federal Requirements to Protect Individual Rights in State Unemployment Compensation Overpayment Prevention and Recovery Procedures issued October 1 2015 https wdr.doleta.gov directives corr doc.cfm DOCN 5763 UIPL No. 19-11 National Effort to Reduce Improper Payments in the Unemployment Insurance UI Program issued June 10 2011 https wdr.doleta.gov directives corr doc.cfm DOCN 3036 UIPL No. 29-05 Memorandum of Understanding Regarding Unemployment Insurance Criminal Investigations Between the U.S. Department of Labor s Office of Inspector General and the Employment and Training Administration issued August 2 2005 https wdr.doleta.gov directives corr doc.cfm DOCN 2104 UIPL No. 12-01 Change 2 States Ability to Exercise Flexibility in Staffing Models for the Performance of Certain Unemployment Compensation UC Administrative 11 Activities issued January 8 2021 https wdr.doleta.gov directives corr doc.cfm DOCN 8998 UIPL No. 04-01 Payment of Compensation and Timeliness of Determinations during a Continued Claims Series issued October 27 2000 https wdr.doleta.gov directives corr doc.cfm DOCN 1746 TEN No. 04-20 Encouragement for States to Use the Integrity Data Hub IDH available through the Unemployment Insurance UI Integrity Center issued August 31 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 3588 TEN No. 03-20 Unemployment Insurance UI Integrity Center s Integrity Data Hub IDH Fraud Alert System issued August 31 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 5585 and Employment Security Manual Section 7511 The Secretary s Interpretation of Federal Law Requirements available at 20 C.F.R. Part 614 Appendix C Standard for Fraud and Overpayment Detection. 7. Attachment s . Attachment I State Size Classifications and Funding Allocation to Support States with Fraud Detection and Prevention Including Identity Verification and Overpayment Recovery Activities in All Unemployment Compensation UC Programs Attachment II Instructions for Completing the SF-424 and Attachment III ETA 9178-ARPA Quarterly Narrative Progress Report.