Unemployment Fraud Recovery -- Passage HR 1163

Passage of the bill, as amended, that would extend the length of time that states have to recover fraudulent COVID-19 and regular unemployment insurance benefit payments and allow states to retain certain percentages of recovered overpayments to use for UI program integrity initiatives. Specifically, the bill would extend from five to 10 years the statute of limitations for criminal charges or civil enforcement actions alleging that an individual engaged in UI benefit fraud. It would extend, from three to 10 years after a payment is made, the amount of time states have to recover UI overpayments made due to fraud under pandemic unemployment assistance programs, the mixed earner unemployment benefit program established during the pandemic, extended UI benefits during the pandemic, and the first week of regular benefits that were fully federally-funded during the pandemic. It would allow states to retain 25 percent of any such recovered funds and require states to use such funds for certain UI program integrity activities, including hiring fraud investigators and prosecutors and modernizing unemployment compensation systems. Beginning two years after enactment, it would allow states to retain five percent of any recovered overpayments of regular and extended unemployment insurance benefits, unless the overpayment was caused by a state agency's error, to be used for UI program integrity and administration costs, including deterring, detecting and preventing improper payments; payments to the Treasury Department on a state loan from the unemployment trust fund; and modernizing state UI technology infrastructure. It would establish requirements for states to be eligible for retention of such funds, including that they use a system for crossmatching UI claimants, use a national new hires directory to identify individuals who may have become employed, and take actions to prevent payments to incarcerated and deceased individuals. It would also reinstate and extend through 2030 certain flexibility for states to hire temporary staff to identify and prosecute fraudulent pandemic UI benefits. As an offset, the bill would repeal a provision in the March 2020 coronavirus response law (PL 116-136) that provided $2 billion for the Labor Department to detect and prevent fraud, promote equitable access, and ensure timely payment with respect to unemployment compensation programs.