FIRST ON FOX: American taxpayers have lost more than $100 billion to fraud and improper payments due to temporary unemployment insurance programs created in response to COVID-19, the House Oversight Committee has found.
Fox News Digital has obtained the House Oversight Committee’s report following its months-long investigation into fraud in pandemic unemployment assistance programs.
The report details information, documents and communications obtained by the committee showing how states across the country, including California, New York and Pennsylvania, processed and administered pandemic unemployment insurance claims with “minimal oversight.”
The committee said the lack of oversight has led to “billions of taxpayer dollars lost to improper and fraudulent payments that will likely never be recovered.”
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The committee found that 11 to 15 percent of total pandemic benefits were fraudulent, or between $100 billion and $135 billion. The Labor Department’s Office of Inspector General estimated that at least $191 billion in pandemic-related unemployment benefits may have been improperly paid, with a “significant portion attributable to fraud.”
A person walks past a storefront with a sign stating that masks are required on Oak Street in Copiague, New York, on May 18, 2022. (Steve Pfost/Newsday RM via Getty Images)
The committee found that states have recovered only about $6.8 billion of those funds.
The committee also found that recipients of these benefits “did not have to provide proof that they were actively seeking employment to continue receiving these benefits.”
For the first nine months of the program, applicants did not have to provide proof of income, which the committee said made the program more vulnerable to fraud. In December 2020, when Congress reauthorized the program, states began requiring applicants to provide proof of past employment and wages.
The Department of Labor reported that the program’s total rate of improper payments was 35.9 percent.
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House Oversight and Accountability Committee Chairman James Comer, R-Ky., speaks during a hearing with FDA Commissioner Dr. Robert Califf in the Rayburn House Office Building on April 11, 2024 in Washington, D.C. (Anna Moneymaker/Getty Images)
In March 2021, the Biden-Harris administration extended pandemic unemployment insurance programs and benefits for an additional six months, even though states and businesses were open and the vaccine rollout was underway.
“Citing labor shortages, 26 states chose to end federal benefits early, saying the exorbitant benefits were causing labor shortages in those states,” the committee found.
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However, the committee also found that organized crime “played a major role” in unemployment insurance fraud by targeting pre-existing vulnerabilities in the system.
“Foreign nationals, organized crime groups, inmates, and individuals acting on their behalf filed fraudulent claims in several states,” the report said. “Insiders, including individuals who worked for state employment agencies, conspired with organized crime factions and others to defraud state unemployment insurance programs, and states did little to stop them.”
House Oversight Committee Chairman James Comer, a Kentucky Republican, blamed the fraud on Democrats and the Biden-Harris administration, saying they “spent trillions of dollars under the guise of pandemic relief.”
People line up to receive coronavirus tests in Washington, DC, in December 2021. (Ting Shen/Xinhua via Getty Images)
Comer said his committee’s first hearing on the issue revealed how “uncontrolled spending has left taxpayer funds, including unemployment insurance programs, vulnerable to significant waste, fraud and abuse.”
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“While Democrats turned a blind eye to this waste of taxpayer dollars, Republicans committed to identifying how these taxpayer funds fell prey to fraudsters and criminal organizations,” Comer said.
Comer said his committee’s report includes recommendations aimed at ensuring that future taxpayer-funded unemployment insurance programs “do not suffer a similar fate.”
“Eliminating waste, fraud, abuse and mismanagement in the federal government remains a top priority for Oversight Republicans, and we will continue to work to protect all American taxpayers,” Comer said.
The committee recommends that for future unemployment insurance benefit programs, the government require claimants to provide proof of work before their claims are reviewed to determine eligibility.
“Unemployment insurance should always be tied to employment,” the report says.
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The committee also recommends that future programs “require state recruiting agencies to check” applicants against federal databases, including federal prisoner databases.
Meanwhile, the committee recommended that Congress consider extending the statute of limitations on fraud schemes associated with pandemic-related unemployment insurance programs, which are set to expire in March 2025, so that criminals who defrauded taxpayers can be brought to justice.
