UIPL_28-20_acc.pdf

ETA Advisory File Text

EMPLOYMENT AND TRAINING ADMINISTRATION ADVISORY SYSTEM U.S. DEPARTMENT OF LABOR Washington D.C. 20210 CLASSIFICATION UI CORRESPONDENCE SYMBOL OUI DPM DATE August 31 2020 RESCISSIONS None EXPIRATION DATE Continuing ADVISORY UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 28-20 TO STATE WORKFORCE AGENCIES FROM JOHN PALLASCH s Assistant Secretary SUBJECT 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 1. Purpose. To remind states of their roles and responsibilities in addressing fraud in the UI system and the techniques and strategies available to assist states with their fraud management operations and to provide states with funding to assist with efforts to prevent and detect fraud and identity theft and recover fraud overpayments in the PUA and PEUC programs using many of the tools and resources already available to states as discussed below. 2. Action Requested. The U.S. Department of Labor s Department Employment and Training Administration ETA requests that State Workforce Agency Administrators provide information contained in this Unemployment Insurance Program Letter UIPL to appropriate program and other staff in the state s workforce system. 3. Summary and Background. a. Summary This UIPL provides guidance to states on addressing fraud in the UI system and reiterates fraud management requirements and tools strategies and services available to states that the Department has previously encouraged states to adopt. To further assist in these efforts the UIPL also provides states with funding to assist with efforts to prevent and detect fraud and imposter claims resulting from identity theft and recover fraud overpayments in the PUA and PEUC programs. b. Background In calendar year 2019 states established 296 749 cases of UI fraud amounting to 366.8 million. Since the enactment of the Coronavirus Aid Relief and Economic Security CARES Act of 2020 which created several new temporary unemployment compensation UC programs including PUA and PEUC UI fraud has 2 increased significantly further testing the integrity of individual state systems and the UI program as a whole. Prior to COVID-19 and the enactment of the CARES Act the Department had been working with states to address fraud in the UI program. As the Department became aware of fraud ticking up in the regular UI program and understood the vulnerabilities of remote claims taking and the potential for imposter claims it began the development of tools and resources through the Integrity Data Hub including the Suspicious Actor Repository and a suite of on-line training modules for fraud investigators. We also began the process of securing an identity verification solution to be make available to all states. These tools are discussed in more detail below. Section 303 a 1 of the Social Security Act SSA requires that as a condition of a state receiving administrative grants for its UI program state law must provide for methods of administration . . . as are found by the Secretary of Labor to be reasonably calculated to insure full payment of unemployment compensation when due. The Department has consistently interpreted section 303 a 1 to require that state law include provision for such methods of administration as are within reason calculated 1 to detect benefits paid through error by the agency through willful misrepresentation or error by the claimant or others and 2 to deter claimants from obtaining benefits through willful misrepresentation. Employment Security Manual Section 7511 The Secretary s Interpretation of Federal Law Requirements.1 UIPL No. 04-01 interprets the when due requirement in section 303 a 1 to also require states to ensure that payment of benefits is not made when payment is not due. Investigations of UI program fraud by claimants employers and state staff are necessary for the proper administration of the UI program. The Department included program integrity language in all of the major pieces of guidance associated with state implementation of the CARES Act programs and other provisions. In addition on May 11 2020 ETA issued UIPL No. 23-20 which discusses program integrity requirements for the regular UC program and the UC programs authorized by the CARES Act. UIPL 23-20 makes clear that the temporary CARES Act programs operate in tandem with the fundamental eligibility requirements of the federal- state UI program. In addition the CARES Act programs have new eligibility requirements that states must apply to ensure that only eligible individuals receive benefits. As previously communicated to States on May 11 2020 States must make efforts to rapidly and proactively prevent detect and investigate fraudulent activity establish and recover fraud overpayments and pursue criminal and civil prosecution to deter fraud. State Benefit Payment Control BPC staff or other designated state staff have the primary responsibility for these activities. However all state staff members are 1 Employment Security Manual Part V Sections 7510-7515 can be obtained at 20 C.F.R. Part 614 Appendix C Standard for Fraud and Overpayment Detection. 3 responsible for maintaining the integrity of the UI program. States can also mitigate UI fraud through the use of available prevention and detection methods and tools. 4. Managing Fraud in the UI System. This UIPL describes successful and cost-effective methods to target fraud and suspicious claims activity including improvements additions and modifications to UI systems and operations that the Department has long encouraged States to adopt. Please refer to UIPL No. 23-20 for an inventory of the required program integrity functions. a. Fraud Prevention and Detection. Intercepting fraud as early as possible minimizes its impact on the UI system. As UI claims are filed states are strongly encouraged to employ multiple techniques to validate UI claims and uncover suspicious or fraudulent characteristics including Identity Verification to verify personal information supplied by individuals filing claims using a variety of methods and resources such as o Social Security Administration Cross-match to validate a Social Security Number supplied by a claimant. o Systematic Alien Verification for Entitlement SAVE to verify the immigration status of non-U.S. citizens and to confirm the validity of the information supplied by individuals filing claims. o Incarceration cross-matches to compare UI applicants information to local state and federal prison databases. o Interstate Connection Network ICON to compare UI applicants information to detect duplicate claims filed in other states and under other UI programs using Interstate Benefits IB Cross-match and the State Identification Inquiry SID State Claims and Overpayment File and the IB8606 applications. o Internet Protocol IP Address to identify IP addresses linked to multiple claims or claims filed outside of the U.S. o Data Analytics to cross-reference UI claims and identify shared characteristics among claims that can be indicators of suspicious or fraudulent claims activity. Data mining and data analytics to detect fraud when a claim is filed and on an ongoing basis throughout the lifecycle of a claim. Continuous efforts to prevent and detect fraud are critical since fraud can occur at any point during the continued claims series. As the Department has emphasized in the past some of the most effective tools are contained in the Integrity Data Hub IDH many of which have been available to states for well over a year. The IDH is a secure robust centralized multi-state data system that allows participating state UI agencies to submit claims for cross-matching provides a national fraud alert system to states and supports data analytics on multi-state claims. The following IDH functionalities are currently available to participating states 4 Suspicious Actor Repository SAR allows states to match UI claims against other states known suspicious claims data. This tool allows each state to benefit from the investigative work of all states as claims data associated with known or probable UI fraud is submitted and stored in the SAR for cross-matching purposes. Suspicious E-Mail Domains allows participating states to cross-match their claims against a database of suspicious e-mail domains that have been associated with fraudulent activity e.g. YOPmail . The IDH flags claims with these domains for further investigation by the submitting state. Foreign IP Addresses allows participating states to receive flags on UI claims filed from IP addresses outside of the U.S. Data Analysis provides the unique ability to analyze national claims data and conduct cross-state analysis within a secure system. Multi State Cross-Match MSCM allows the IDH to collect and store claims data submitted by states creating a multi-state database of UI claims data. Using this database the IDH is able to identify where UI claims data are being used across multiple states i.e. flagging a Social Security Number that is being used across four different states . The MSCM also provides a lookback capability to identify after- the-fact matches based on new claims or fraud activity data submitted to the IDH. Identity Verification IDV provides states with a centralized identity verification identity proofing solution. The IDV solution provides fraud scoring information including flagging of synthetic identities. The IDV solution is now operational and available for state use. Early adopter states have reported that it is a highly successful integrity resource to prevent and detect identity theft. Fraud Alert System allows states to share information through the secure IDH environment on emergent fraud schemes activities identified in their states. The capability allows all states to review and or submit information on fraud schemes and to receive updates to improve awareness across the UI community. The IDH Fraud Alert System is available to all states independent of the state executing an agreement with the UI Integrity Center or participating in other IDH functionality. Other valuable assets provided by the UI Integrity Center include the following UI Integrity Center Fraud Calls states ETA and Office of Inspector General OIG staff have been engaging in periodic conference calls since fraud was first being detected in the early stages of the CARES Act program to discuss and share information on UI fraud schemes. These calls are conducted by the UI Integrity Center to share information on UI Integrity Center services tools and resources and to provide a secure forum for states to discuss emergent fraud schemes and share best practices to prevent and detect fraud activity affecting the UI system. State Services the UI Integrity Center employs a diverse group of UI professionals with a broad range of experience. The State Services team provides both virtual and onsite consultation services to states to provide state-specific recommendations and operational best practices in the prevention and detection of identity theft and fraud and the recovery of improper payments. These services have been available to states for over 2 years. 5 National Integrity Academy NIA one of the first offerings of the Integrity Center the Academy currently provides 126 eLearning lessons and modules including course bundles targeted to new Claims Takers Adjudicators and staff administering the Pandemic Unemployment Assistance PUA program and includes four NIA certificate programs UI Operations Integrity Certificate UI Tax Integrity Certificate UI Fraud Investigations and UI Program Leadership. Additional information about course offerings along with the online course catalog can be found at https www.naswa.org learning. Integrity Knowledge Exchange an increasingly valuable tool that captures information on state practices and provides recommendations to states on ways to combat UI fraud and improve integrity. Through the Integrity Knowledge Exchange the UI Integrity Center documents specific practices creates model operational blueprints and shares information with all states. Nearly 1 900 resource documents are currently available on the knowledge exchange including 96 documented successful integrity practices that support the Model BPC Blueprint. As the Department has previously communicated States are on notice that they should engage with the UI Integrity Center and utilize its important integrity tools and resources implement and fully utilize all IDH functionalities submit and review emergent fraud schemes through the IDH Fraud Alert System and participate in UI Integrity Center fraud calls. State s failure to take advantage of these resources may result in a state s inability to comply with Federal law to prevent detect and recover improper and fraudulent payments. Technical assistance tools and resources are available through the UI Integrity Center at https integrity.naswa.org and the UI Community of Practice on the Department s knowledge sharing site WorkforceGPS at https www.workforcegps.org login returnUrl https ui.workforcegps.org siteFor ui. Additionally states may contact the UI Integrity Center State Liaison for their region for additional assistance at https integrity.naswa.org contact-us. States are also encouraged to explore other tools methods and strategies to deter and prevent fraud such as the Social Security Administration s Death Cross-match Vital Statistics Cross-matches Department of Motor Vehicles Cross-matches Fictitious Employer Cross-matches and other comparisons that detect shared characteristics i.e. phone numbers mailing addresses email address and banking information on multiple claims. b. Fraud Civil and Criminal Prosecutions. The prosecution of cases is usually aided by law enforcement agencies such as the OIG Department of Justice and other federal state and local enforcement agencies. States should work collaboratively with law enforcement agencies to administer their prosecutorial actions and continue to make referrals to the OIG in accordance with established agreements and following the requirements outlined in UIPL Nos. 04-17 and 29-05 reporting known or alleged fraudulent activities and providing related claims data to the OIG s Office of Investigations. 6 5. Funding for States to Address Fraud in the PUA and PEUC Programs. Many states have experienced a significant number of fraudulent claims in the CARES Act programs including PUA and PEUC and are working with federal state and local law enforcement to investigate prosecute and in collaboration with banking institutions recover identified fraudulent payments. As a result of the significant increase in fraud and the need for states to have additional funding to support fraud prevention detection and investigation activities the Department is providing a total of 100 million in administrative funding targeted specifically at addressing fraud and identity theft in the PUA and PEUC programs as part of its responsibility to provide such sums as necessary for administration of the CARES Act programs. Attachment I State Size Classifications and Funding Allocation for Fraud Investigation Activities in the Pandemic Unemployment Assistance PUA and Pandemic Emergency Unemployment Compensation PEUC Programs lists the amounts of PUA and PEUC funding provided for fraud investigation activities for each state. The methodology for state funding levels is based on state size.2 For purposes of this methodology States are assigned to three groups Small Medium and Large based on the 12-month average of UI covered employment for the four quarters in calendar year 2019 reported on the ES 202 Employment Wages and Contributions report published by the Bureau of Labor Statistics. 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 greater than 2 million employees a. Use of Funds. States are permitted to use this targeted funding for staff or contract services to conduct fraud investigations and other fraud detection-related activities or to implement tools to increase prevention detection and recovery of fraudulent improper payments in the PUA and PEUC programs. States may also work collaboratively to invest these funds to benefit multiple states. It is ETA s expectation that states will use at least 50 percent of the funds for staff to conduct fraud prevention detection and investigatory activities. Examples of activities that these funds may be used for include but are not limited to Accessing and utilizing the private or public data sets available through the UI Integrity Center s IDH see Section 4 a above for details . ETA expects that all states will be positioned to use this data as soon as administratively feasible and no later than March 31 2021. Implementing data mining tools including the use of staff or contractor services for conducting data mining activities. Implementing software tools to conduct data analytics including the use of staff or contractor services for conducting data analytics activities. 2 The Pacific territories are included in PUA pursuant to CARES Act Section 2101 a 5 but not in PEUC. Since the Pacific territories have relatively small populations and do not operate regular UI programs and therefore lack information on covered employment their PUA funding is based on estimated claims workloads. 7 b. Application Instructions. States are required to submit an SF-424 for each funding allotment i.e. one SF-424 for the PUA funding and a second SF-424 for the PEUC funding . ETA encourages states to submit these forms as soon as possible but no later than September 15 2020 by electronic submission to the 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 Instructions for Completing the SF-424. Attachment I State Size Classifications and Funding Allocation for Fraud Investigation Activities in the Pandemic Unemployment Assistance PUA and Pandemic Emergency Unemployment Compensation PEUC Programs lists the funding allotment s for both the PUA and PEUC programs for each state. c. Reporting Requirements. States will report quarterly progress on the form ETA 9178-F provided at Attachment III.3 The ETA 9178-F is intended to be a monitoring instrument used by ETA to track each state s progress in addressing fraud in the PUA and PEUC programs with these funds. The form ETA 9178-F will be used by the states to provide ETA with narrative updates on fraud investigation activities to help ensure that the goals described in section 5 a of this UIPL are met. Please refer to Attachment III for instructions for completion and the timeline of submission for the ETA 9178-F. 6. Inquiries. Please direct inquiries to the appropriate ETA Regional Office. 7. References. 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 20 C.F.R. Section 603.23 UIPL No. 15-20 Coronavirus Aid Relief and Economic Security CARES Act of 2020 Federal Pandemic Unemployment Compensation FPUC Program Operating Financial and Reporting Instructions issued April 4 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 9297 UIPL No. 15-20 Change 1 Coronavirus Aid Relief and Economic Security CARES Act of 2020 - Federal Pandemic Unemployment Compensation FPUC Program Reporting Instructions and Questions and Answers issued May 9 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 3946 UIPL No. 15-20 Change 2 Coronavirus Aid Relief and Economic Security CARES Act of 2020-New Data Collection Instrument and Revised Reporting Instructions for Federal Pandemic Unemployment Compensation FPUC issued June 15 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 7785 3 CARES Act Section 2116 provides that Chapter 35 of Title 44 of the U.S. Code commonly referred to as the Paperwork Reduction Act of 1995 shall not apply to provisions of and amendments made by Subtitle A Unemployment Insurance Provisions of Title II of the CARES Act. 8 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. 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 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. 17-20 Coronavirus Aid Relief and Economic Security CARES Act of 2020 Pandemic Emergency Unemployment Compensation PEUC Program Operating Financial and Reporting Instructions issued April 10 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 8452 UIPL No. 17-20 Change 1 Coronavirus Aid Relief and Economic Security CARES Act of 2020-Pandemic Emergency Unemployment Compensation PEUC Program Questions and Answers and Revised Reporting Instructions for the PEUC ETA 227 issued May 13 2020 https wdr.doleta.gov directives corr doc.cfm DOCN 8689 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. 13-19 National Directory of New Hires NDNH and State Directory of New Hires SDNH Guidance and Best Practices issued June 7 2019 https wdr.doleta.gov directives corr doc.cfm docn 5373 TEN No. 12-16 Unemployment Insurance UI State Information Data Exchange System SIDES issued September 27 2016 https wdr.doleta.gov directives corr doc.cfm DOCN 8026 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. 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. 5-13 Work Search and Overpayment Offset Provisions Added to Permanent Federal Unemployment Compensation Law by Title II Subtitle A of the Middle Class Tax Relief and Job Creation Act of 2012 issued January 10 2013 https wdr.doleta.gov directives corr doc.cfm DOCN 3698 9 UIPL No. 12-14 Required Use of the Treasury Offset Program to Collect Covered Unemployment Compensation Debt issued May 20 2014 https wdr.doleta.gov directives corr doc.cfm DOCN 9344 UIPL No. 28-11 Unemployment Insurance UI State Integrity Task Forces and Strategic Plans issued September 1 2011 https wdr.doleta.gov directives corr doc.cfm DOCN 3078 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. 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. 3-20 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 ET Handbook No. 336 18th Edition Unemployment Insurance State Quality Service Plan Planning and Reporting Guidelines May 6 2019 https wdr.doleta.gov directives attach ETAHandbook ET Handbook No.336 18th Edition Change 4 acc.pdf ET Handbook No. 401 5th Edition issued August 16 2017 https wdr.doleta.gov directives corr doc.cfm DOCN 7774 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.8.Attachment s . Attachment I State Size Classifications and Funding Allocation for Fraud Investigation Activities in the Pandemic Unemployment Assistance PUA and Pandemic Emergency Unemployment Compensation PEUC Programs Attachment II Instructions for Completing the SF-424 Attachment III ETA 9178-F Quarterly Narrative Progress Report