,,ii #aagth ,,congress #b;d ,session ,s4 #dejg ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,july #ab1 #bjbb,mr4 ,crapo 7for himself1 ,mr4 ,portman1 ,mr4 ,braun1 ,mr4 ,marshall1 ,mr4 ,daines1 ,mrs4 ,blackburn1 ,mr4 ,thune1 ,mr4 ,cassidy1 ,mr4 ,risch1 ,mr4 ,kennedy1 ,mrs4 ,fischer1 ,ms4 ,collins1 ,mr4 ,lankford1 ,mr4 ,romney1 and ,mr4 ,toomey7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to provide incentives for ,states to recover fraudulently paid ,federal and ,state unemployment compensation1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,chase ,,covid ,unemployment ,fraud ,act of #bjbb4 #b4 ,findings ,congress finds the following3 7#a7 ,throughout the ,,covid-#ai pandemic criminal organizations1 including international cybercrime rings and opportunistic foreign actors1 exploited a national crisis to steal billions from ,american taxpayers4 ,fraud delayed legitimate payments to unemployed workers and turned thousands of ,americans into unwitting identity theft victims4 7#b7 ,the size1 scope1 and severity of pandemic unemployment fraud is not fully known4 7#c7 ,the ,labor ,department's ,office of the ,inspector ,general estimates that at least #afc billion of the #hgb4e billion in ,federal-,state unemployment benefits paid during the pandemic could have been improperly paid1 with a significant portion attributable to fraud4 ,just over #d billion of these funds have been recovered4 7#d7 ,the ,white ,house has estimated an #ah4ga percent improper payment rate in the ,federal-,state unemployment insurance program in fiscal year #bjba4 ,this estimate does not include improper payments made in the ,pandemic ,unemployment ,assistance program1 nor does it include the period of greatest fraudulent activity when generous #fjj weekly ,federal supplements made unemployment a lucrative target for fraudsters4 7#e7 ,according to the ,government ,accountability ,office1 from ,march #bjbj through ,october #bjba1 #ade individuals pleaded guilty to ,federal charges of defrauding unemployment insurance programs and ,federal charges are pending against #bej individuals4 7#f7 ,as of ,january #bjbb1 the ,labor ,department's ,inspector ,general reported opening more than #ca1jjj investigative matters involving alleged unemployment fraud and reported that it assisted other ,federal and ,state agencies in identifying and recovering more than #efe million in fraudulently stolen unemployment benefits4 7#g7 ,in ,california1 ,state workforce officials confirmed they paid out fraudulent unemployment claims totaling #aa billion and identified another #bj billion in claims still under investigation4 7#h7 ,the ,pandemic ,response ,accountability ,committee published a report compiling the results of investigations from #af ,state auditors1 finding #ci billion in pandemic unemployment fraud4 7#i7 ,there is growing evidence that criminal groups perpetrating unemployment fraud pose a threat to national security4 7#aj7 ,according to the ,department of ,justice and ,u4,s4 ,secret ,service1 a significant amount of fraud was driven by known transnational organized criminal networks1 including cartels with origins in countries including ,china1 ,ghana1 ,nigeria1 ,romania1 and ,russia4 7#aa7 ,the ,department of ,justice reports that the ,international ,organized ,crime ,intelligence ,operations ,center has referred a large number of unemployment fraud cases to the ,federal ,bureau of ,investigation4 7#ab7 ,the ,american people expect ,congress to be an effective steward of taxpayer dollars and vigilant in pursuit and recovery of funds when taxpayer dollars are improperly paid4 7#ac7 ,congress has a responsibility to gain restitution for ,american taxpayers by ensuring aggressive identification1 investigation1 and prosecution of criminal fraud in pandemic unemployment programs4 #c4 ,recovering ,federal fraudulent ,,covid unemployment compensation payments 7a7 ,allowing ,states ,to retain percentage of overpayments for administration1 information technology modernization1 and program integrity 7#a7 ,pandemic unemployment assistance 7,a7 ,in general ,section #bajb of the ,,cares ,act 7#ae ,u4,s4,c4 #ijba7 is amended-- 7i7 by redesignating subsection 7h7 as subsection 7i72 and 7ii7 by inserting after subsection 7g7 the following3 7h7 ,fraud and overpayments 7#a7 ,in general ,if an individual knowingly has made1 or caused to be made by another1 a false statement or representation of a material fact1 or knowingly has failed1 or caused another to fail1 to disclose a material fact1 and as a result of such false statement or representation or of such nondisclosure such individual has received an amount of pandemic unemployment assistance under this section to which such individual was not entitled1 such individual-- 7,a7 shall be ineligible for further pandemic unemployment assistance under this section in accordance with the provisions of the applicable ,state unemployment compensation law relating to fraud in connection with a claim for unemployment compensation2 and 7,b7 shall be subject to prosecution under section #ajja of title #ah1 ,united ,states ,code4 7#b7 ,repayment ,in the case of individuals who have received amounts of pandemic unemployment assistance under this section to which they were not entitled1 the ,state shall require such individuals to repay the amounts of such pandemic unemployment assistance to the ,state agency1 except that the ,state agency may waive such repayment if it determines that-- 7,a7 the payment of such pandemic unemployment assistance was without fault on the part of any such individual2 and 7,b7 such repayment would be contrary to equity and good conscience4 7#c7 ,recovery by state agency 7,a7 ,in general ,the ,state agency shall recover the amount to be repaid1 or any part thereof1 by deductions from any unemployment compensation payable to such individual under any ,state or ,federal unemployment compensation law administered by the ,state agency or under any other ,state or ,federal law administered by the ,state agency which provides for the payment of any assistance or allowance with respect to any week of unemployment1 during the #e-year period after the date such individuals received the payment of the pandemic unemployment assistance to which they were not entitled1 in accordance with the same procedures as apply to the recovery of overpayments of regular unemployment benefits paid by the ,state1 except that a ,state may retain a percentage of any amounts recovered as described in subparagraph 7,c74 7,b7 ,opportunity for hearing ,no repayment shall be required1 and no deduction shall be made1 until a determination has been made1 notice thereof and an opportunity for a fair hearing has been given to the individual1 and the determination has become final4 7,c7 ,retention of percentage of recovered funds ,the ,state agency may retain #be percent of any amount recovered from overpayments of pandemic unemployment assistance that were determined to be made due to fraud4 ,amounts so retained by the ,state agency shall be used for administration of the ,state's unemployment compensation program for any of following3 7i7 ,modernizing unemployment compensation systems and information technology to improve accuracy of benefit payments1 cybersecurity1 and identity verification and validation of applicants4 7ii7 ,administrative costs incurred by the ,state to identify and pursue recovery of fraudulent overpayments4 7iii7 ,hiring fraud investigators and prosecutors4 7iv7 ,other program integrity purposes identified by the ,state and approved by the ,secretary4 4 7,b7 ,conforming amendment ,section #bajb7;d7 of such ,act 7#ae ,u4,s4,c4 #ijba7;d77 is amended by striking paragraph 7#d74 7#b7 ,federal ,pandemic ,unemployment ,compensation ,section #bajd7;f77#c7 of such ,act 7#ae ,u4,s4,c4 #ijbc7;f77#c77 is amended-- 7,a7 in subparagraph 7,a7-- 7i7 by striking #c-year and inserting #e-year2 and 7ii7 by inserting 1 except that a ,state may retain a percentage of any amounts recovered as described in subparagraph 7,c7 before the period at the end2 and 7,b7 by adding at the end the following3 7,c7 ,retention of percentage of recovered funds ,the ,state agency may retain #be percent of any amount recovered from overpayments of ,federal ,pandemic ,unemployment ,compensation or ,mixed ,earner ,unemployment ,compensation that were determined to be made due to fraud4 ,amounts so retained by the ,state agency shall be used for administration of the ,state's unemployment compensation program for any of following3 7i7 ,modernizing unemployment compensation systems and information technology to improve accuracy of benefit payments1 cybersecurity1 and identity verification and validation of applicants4 7ii7 ,administrative costs incurred by the ,state to identify and pursue recovery of fraudulent overpayments4 7iii7 ,hiring fraud investigators and prosecutors4 7iv7 ,other program integrity purposes identified by the ,state and approved by the ,secretary4 4 7#c7 ,pandemic emergency unemployment compensation ,section #bajg7;e77#c7 of such ,act 7#ae ,u4,s4,c4 #ijbe7;e77#c77 is amended-- 7,a7 in subparagraph 7,a7-- 7i7 by striking #c-year and inserting #e-year2 and 7ii7 by inserting 1 except that a ,state may retain a percentage of any amounts recovered as described in subparagraph 7,c7 before the period at the end2 and 7,b7 by adding at the end the following3 7,c7 ,retention of percentage of recovered funds ,the ,state agency may retain #be percent of any amount recovered from overpayments of pandemic emergency unemployment compensation that were determined to be made due to fraud4 ,amounts so retained by the ,state agency shall be used for administration of the ,state's unemployment compensation program for any of following3 7i7 ,modernizing unemployment compensation systems and information technology to improve accuracy of benefit payments1 cybersecurity1 and identity verification and validation of applicants4 7ii7 ,reimbursement of administrative costs incurred by the ,state to identify and pursue recovery of fraudulent overpayments4 7iii7 ,hiring fraud investigators and prosecutors4 7iv7 ,other program integrity purposes identified by the ,state and approved by the ,secretary4 4 7b7 ,treatment under withdrawal requirements ,any amount retained by a ,state pursuant to section #bajb7;h77#c77;,c71 section #bajd7;f77#c77;,c71 or #bajg7;e77#c77;,c7 of the ,,cares ,act1 and used for the purposes described therein1 shall not be considered to violate the withdrawal requirements of paragraph 7#d7 or 7#e7 of section #cjc7;a7 of the ,social ,security ,act 7#db ,u4,s4,c4 #ejc7;a77 or paragraph 7#d7 or 7#e7 of section #ccjd7;a7 of the ,internal ,revenue ,code of #aihf4 7c7 ,limitation on retention authority ,the authority of a ,state to retain any amount pursuant to section #bajb7;h77#c77;,c71 section #bajd7;f77#c77;,c71 and #bajg7;e77#c77;,c7 of the ,,cares ,act shall apply only-- 7#a7 with respect to an amount recovered on or after the date of enactment of this ,act2 and 7#b7 during the #e-year period beginning on the date on which such amount was received by an individual not entitled to such amount4 #d4 ,permissible uses of unemployment fund for program administration 7a7 ,withdrawal standard in the ,internal ,revenue ,code ,section #ccjd7;a77#d7 of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 in subparagraph 7,f71 by striking and after the semicolon2 7#b7 by inserting after subparagraph 7,g7 the following new subparagraphs3 7,h7 an amount1 not to exceed #e percent1 of any overpayment of compensation recovered by the ,state 7other than an overpayment made as the result of agency error7 may1 immediately following the ,state's receipt of such recovered amount1 be deposited in a ,state fund from which money may be withdrawn for-- 7i7 the payment of costs of deterring1 detecting1 and collecting improper payments to individuals2 7ii7 purposes relating to the proper classification of employees as independent contractors1 implementation of provisions of ,state law implementing section #cjc7k7 of the ,social ,security ,act1 or other provisions of ,state law relating to employer fraud or evasion of contributions2 7iii7 the payment to the ,secretary of the ,treasury to the credit of the account of the ,state in the ,unemployment ,trust ,fund2 7iv7 modernizing the ,state's unemployment insurance technology infrastructure2 or 7v7 otherwise assisting ,states in improving the timely and accurate administration of a ,state's unemployment compensation law2 and 7,i7 an amount1 not to exceed #e percent1 of any payments of contributions1 or payments in lieu of contributions1 that are collected as a result of an investigation and assessment by the ,state agency may1 immediately following receipt of such payments1 be deposited in a ,state fund from which moneys may be withdrawn for the purposes specified in subparagraph 7,h72 4 7b7 ,definition of unemployment fund ,section #ccjf7;f7 of the ,internal ,revenue ,code of #aihf is amended by striking and for refunds of sums and all that follows and inserting 1 except as otherwise provided in section #ccjd7;a77#d71 section #cjc7;a77#e7 of the ,social ,security ,act1 or any other provision of ,federal unemployment compensation law44 7c7 ,withdrawal standard in ,social ,security ,act ,section #cjc7;a77#e7 of the ,social ,security ,act 7#db ,u4,s4,c4 #ejc7;a77#e77 is amended by striking and for refunds of sums and all that follows and inserting except as otherwise provided in this section1 section #ccjd7;a77#d7 of the ,internal ,revenue ,code of #aihf1 or any other provisions of ,federal unemployment compensation law2 and4 7d7 ,immediate deposit requirements in the internal revenue code ,section #ccjd7;a77#c7 of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7#c7 all money received in the unemployment fund shall immediately upon such receipt be paid over to the ,secretary of the ,treasury to the credit of the ,unemployment ,trust ,fund established by section #ijd of the ,social ,security ,act 7#db ,u4,s4,c4 #aajd71 except for-- 7,a7 refunds of sums improperly paid into such fund2 7,b7 refunds paid in accordance with the provisions of section #ccje7;b72 and 7,c7 amounts deposited in a ,state fund in accordance with subparagraph 7,h7 or 7,i7 of paragraph 7#d72 4 7e7 ,immediate deposit requirement in ,social ,security ,act requirement ,section #cjc7;a77#d7 of the ,social ,security ,act 7#db ,u4,s4,c4 #ejc7;a77#d77 is amended by striking the parenthetical and inserting 7except as otherwise provided in this section1 section #ccjd7;a77#c7 of the ,internal ,revenue ,code of #aihf1 or any other provisions of ,federal unemployment compensation law74 7f7 ,application to ,federal payments ,when administering any ,federal program providing compensation 7as defined in section #ccjf of the ,internal ,revenue ,code of #aihf71 the ,state shall use the authority provided under subparagraphs 7,h7 and 7,i7 of section #ccjd7;a77#d7 of such ,code in the same manner as such authority is used with respect to improper payments made under the ,state unemployment compensation law4 ,with respect to improper ,federal payments recovered consistent with the authority under subparagraphs 7,h7 and 7,i7 of such section1 the ,state shall immediately deposit the same percentage of the recovered payments into the same ,state fund as provided in the ,state law implementing that section4 7g7 ,effective date ,the amendments made by this section shall apply to overpayments or payments or contributions 7or payments in lieu of contributions7 that are collected as a result of an investigation and assessment by the ,state agency after the end of the #b-year period beginning on the date of the enactment of this ,act1 except that nothing in this section shall be interpreted to prevent a ,state from amending its law before the end of such period4 #e4 ,preventing unemployment compensation fraud through data matching1 identity verification1 and income verification 7a7 ,unemployment compensation data integrity hub 7#a7 ,in general ,section #cjc7;a7 of the ,social ,security ,act 7#db ,u4,s4,c4 #ejc7;a77 is amended by adding at the end the following3 7#ac7 ,the ,state agency charged with administration of the ,state law shall use the system designated by the ,secretary of ,labor for cross-matching claimants of unemployment compensation under ,state law against any databases in the system to prevent and detect fraud and improper payments4 4 7b7 ,use of fraud prevention and detection systems in administration of unemployment compensation programs 7#a7 ,in general ,section #cjc of the ,social ,security ,act 7#db ,u4,s4,c4 #ejc71 as amended by subsection 7a71 is further amended by adding at the end the following3 7n7 ,state use of fraud prevention and detection systems 7#a7 ,in general ,the ,state agency charged with administration of the ,state law shall establish procedures to do the following3 7,a7 ,national ,directory of ,new ,hires ,use the ,national ,directory of ,new ,hires established under section #dec7;i7-- 7i7 to compare information in such ,directory against information about individuals claiming unemployment compensation to identify any such individuals who may have become employed1 in accordance with any regulations that the ,secretary of ,health and ,human ,services may issue and consistent with the computer matching provisions of the ,privacy ,act of #aigd2 7ii7 to take timely action to verify whether the individuals identified pursuant to clause 7i7 are employed2 and 7iii7 upon verification pursuant to clause 7ii71 to take appropriate action to suspend or modify unemployment compensation payments1 and to initiate recovery of any improper unemployment compensation payments that have been made4 7,b7 ,state ,information ,data ,exchange ,system ,use the ,department of ,labor's ,state ,information ,data ,exchange ,system to facilitate employer responses to requests for information from ,state workforce agencies4 7,c7 ,incarcerated individuals ,seek information from the ,commissioner of ,social ,security under sections #bjb7x77#c77;,b77iv7 and #afaa7;e77#a77;,i77iii71 and from such other sources as the ,state agency determines appropriate1 to obtain the information necessary to carry out the provisions of a ,state law under which an individual who is confined in a jail1 prison1 or other penal institution or correctional facility is ineligible for unemployment compensation on account of such individuals inability to satisfy the requirement under subsection 7a77#ab74 7,d7 ,deceased individuals ,compare information of individuals claiming unemployment compensation against the information regarding deceased individuals furnished to or maintained by the ,commissioner of ,social ,security under section #bje7r74 7#b7 ,enforcement ,whenever the ,secretary of ,labor1 after reasonable notice and opportunity for hearing to the ,state agency charged with the administration of the ,state law1 finds that the ,state agency fails to comply substantially with the requirements of paragraph 7#a71 the ,secretary of ,labor shall notify such ,state agency that further payments will not be made to the ,state until the ,secretary of ,labor is satisfied that there is no longer any such failure4 ,until the ,secretary of ,labor is so satisfied1 such ,secretary shall make no future certification to the ,secretary of the ,treasury with respect to such ,state4 7#c7 ,unemployment compensation ,for the purposes of this subsection1 any reference to unemployment compensation described in this paragraph shall be considered to refer to-- 7,a7 regular or extended compensation 7as defined by section #bje of the ,federal-,state ,extended ,unemployment ,compensation ,act of #aigj72 7,b7 unemployment compensation 7as defined by section #he7;b7 of the ,internal ,revenue ,code of #aihf7 provided under any program administered by a ,state under an agreement with the ,secretary2 and 7,c7 short-time compensation under a short-time compensation program 7as defined in section #ccjf7v7 of the ,internal ,revenue ,code of #aihf74 4 7c7 ,effective date ,the amendments made by this section shall take effect with respect to each ,state to weeks of unemployment beginning on or after the earlier of-- 7#a7 the date the ,state changes its statutes1 regulations1 or policies in order to comply with such amendment2 or 7#b7 ,october #a1 #bjbd4 #f4 ,reporting unemployment compensation overpayments and fraud 7a7 ,in general ,the ,secretary of ,labor shall collect data from each ,state on the amount of overpayment recoveries that are waived related to unemployment compensation programs authorized by the ,,cares ,act 7#ae ,u4,s4,c4 #ijba et seq471 with a separate accounting for the pandemic unemployment assistance program1 and any unemployment compensation amounts excluded by each ,state from ,,irs ,form #ajii-;,g1 ,certain ,government ,payments1 during taxable years #bjbj and #bjba due to suspected or confirmed fraud4 7b7 ,report to ,congress ,not later than #abj days after the date of enactment of this ,act1 the ,secretary of ,labor shall submit a report to the ,committees on ,ways and ,means and ,oversight and ,reform of the ,house of ,representatives and the ,committees on ,finance and ,homeland ,security and ,governmental ,affairs of the ,senate that conveys the overpayment data described in subparagraph 7a7 and includes an estimate of the aggregate amount of pandemic unemployment compensation overpayments nationally1 including the subset of overpayments made due to fraud1 and total amounts recovered by ,federal or ,state agencies4 ,such report shall be updated by the ,secretary not later than #abj days after submission of the initial report to ,congress4 7c7 ,expedited collection ,the ,secretary of ,labor may waive the requirements of subchapter ,i of chapter #ce of title #dd1 ,united ,states ,code 7commonly referred to as the ,paperwork ,reduction ,act7 with respect to the provisions in the amendments made by this ,act4 #g4 ,prohibition on ,department of ,labor allowing blanket waivers of overpayments ,upon the date of enactment1 the ,secretary of ,labor shall be prohibited from issuing guidance that permits ,states to use blanket or issue categorical waivers of overpayment recovery in ,federal pandemic unemployment compensation programs authorized under the ,,cares ,act 7#ae ,u4,s4,c4 #ijba et seq474 ,the ,secretary shall amend or rescind any guidance as necessary to conform with the prohibition in the preceding sentence4 #h4 ,extension of emergency ,state staffing flexibility ,if a ,state modifies its unemployment compensation law and policies with respect to personnel standards on a merit basis on an emergency temporary basis as determined by the ,secretary1 including for detection1 pursuit1 and recovery of fraudulent pandemic unemployment benefits1 subject to the succeeding sentence1 such modifications shall be disregarded for the purposes of applying section #cjc of the ,social ,security ,act 7#db ,u4,s4,c4 #ejc7 and section #ccjd of the ,internal ,revenue ,code of #aihf to such ,state law4 ,such modifications shall apply through ,december #ca1 #bjbc1 and may include engaging temporary staff1 hiring retirees or former employees on a non-competitive basis1 contracting with vendors1 and other temporary actions to identify1 investigate1 prosecute1 and recover fraudulent pandemic unemployment compensation benefits4