The next COVID relief/reconciliation bill must include provisions to stop prisoners from filing fraudulent claims for unemployment benefits. Congress worked in bipartisan fashion with the previous administration to provide important unemployment benefits for workers who were unemployed due to no fault of their own. It was the right thing to do, to care for American families and sustain their income while sectors of the economy were shut down to flatten the curve and meet the unprecedented health care needs caused by the COVID-19 pandemic.
Regrettably, some unscrupulous residents of federal and state prisons gamed the system, exploited the relaxed eligibility determinations, were put on state unemployment rolls, and received billions of dollars in fraudulent unemployment benefits. While many states had procedures in place to prevent such fraud by checking unemployment rolls against prison rolls, some states did not.
One newspaper reported in late November 2020, “a group of California district attorneys made the stunning disclosure that the state had disbursed as much as $1 billion in fraudulent pandemic unemployment assistance to state prisoners and their accomplices.” Bank of America wrote to state legislators that they had uncovered fraudulent activity covering more than 345,000 different accounts, and further wrote, “Our assessment is that there is activity consistent with fraud in those accounts on the order of approximately $2 billion.”
This is a stunning revelation and an abuse that must be rectified. We must ensure that moving forward, no such defrauding of the taxpayers takes place. The next COVID relief legislation must include safeguards to prevent this from happening again.
The Pandemic Unemployment Assistance (Section 2102 of the CARES Act) extended unemployment assistance to many workers who would not have been eligible for assistance under traditional unemployment benefits. In Section 2104, Emergency increase in unemployment compensation benefits, a temporary increase was included to provide an increase in benefits. Millions of American workers were idled through no fault of their own. The recently passed omnibus appropriations act extended these provisions.
I introduced H.R. 723, Reducing Fraud in Unemployment Assistance Act, to prevent such fraud in the future. The principle of the bill is simple: A state unemployment administration would be required to ensure comparison of the rolls of unemployment beneficiaries with the rolls of inmates in the federal and state prisons within that state. When prisoners were found to be on the unemployment rolls, the state would be required to refer such prisoners to the appropriate authorities for investigation under existing laws governing unemployment fraud.
In addition, when a state unemployment administration recovers assistance that was fraudulently paid to prisoners under Sections 2102 and 2104, such an overpayment will be deducted from amounts otherwise due to the state from the federal government for unemployment programs. The federal government would be made whole as the states recover fraudulent payments.
The idea here is quite simple and will help prevent perverse incentives and fraudulent claims and payments. Stealing from the unemployment fund is among the worst crimes and done at a time when many need the assistance. We will continue to help individuals and working families while rooting out fraud and holding those who abuse the system accountable.
Bill Posey represents Florida’s 8th District.