Combatting COVID Unemployment Fraud Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 3268 To prevent fraud in COVID unemployment programs, recover fraudulently paid benefits, provide relief for taxpayers and victims of unemployment fraud, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 17, 2021 Mr. BRADY (for himself, Mr. REED, Mrs. WALORSKI, Mr. KELLY of Pennsyl- vania, Mr. RICE of South Carolina, Mr. SMUCKER, Mrs. MILLER of West Virginia, Mr. WENSTRUP, Mr. SCHWEIKERT, Mr. LAHOOD, Mr. FER- GUSON, Mrs. STEEL, Mr. NUNES, Mr. HERN, Mr. ESTES, Mr. SMITH of Nebraska, and Mr. MCCARTHY) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To prevent fraud in COVID unemployment programs, recover fraudulently paid benefits, provide relief for taxpayers and victims of unemployment fraud, and for other pur- poses. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Combatting COVID 4 Unemployment Fraud Act of 2021’’. 5 VerDate Sep 11 2014 04:42 Jun 15, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3268.IH H3268 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3268 IH SEC. 2. PREVENTING FRAUD IN PANDEMIC UNEMPLOY- 1 MENT ASSISTANCE. 2 (a) VERIFICATION OF ELIGIBILITY FOR PANDEMIC 3 UNEMPLOYMENT ASSISTANCE PRIOR TO AUTHORIZING 4 BENEFITS.— 5 (1) IN GENERAL.—Section 2102 of the CARES 6 Act (15 U.S.C. 9021) is amended— 7 (A) in subsection (a)(3)(A)— 8 (i) in clause (ii)— 9 (I) in the matter preceding sub- 10 clause (I), by striking ‘‘provides self- 11 certification’’ and inserting ‘‘provides, 12 not later than 30 days after the date 13 of application, such documentation as 14 the State may require, dem- 15 onstrating’’; 16 (II) in subclause (I), in the mat- 17 ter preceding item (aa), by inserting 18 ‘‘in the employment or service de- 19 scribed in clause (iv)’’ after ‘‘unavail- 20 able to work’’; and 21 (III) in subclause (II), by strik- 22 ing ‘‘and’’ at the end; 23 (ii) by amending clause (iii) to read as 24 follows: 25 VerDate Sep 11 2014 04:42 Jun 15, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3268.IH H3268 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3268 IH ‘‘(iii)(I) provides, not later than 30 1 days after the date of application and prior 2 to the authorization of pandemic unem- 3 ployment assistance, such documentation 4 as the State agency may require (in ac- 5 cordance with section 625.6(e) of title 20, 6 Code of Federal Regulations, or any suc- 7 cessor thereto, except with respect to the 8 deadline for submission) to substantiate 9 prior employment or self-employment or 10 the planned commencement of employment 11 and earnings, as applicable, except that the 12 deadline for submission may be extended if 13 the individual has shown good cause under 14 applicable State law that justifies a delay 15 in submitting such documentation; and 16 ‘‘(II) provides documentation to the 17 satisfaction of the State agency, or the en- 18 tity verifying identify on behalf of the 19 State agency, verifying the individual’s 20 identity prior to authorizing benefits; and’’; 21 and 22 (iii) by adding at the end the fol- 23 lowing: 24 VerDate Sep 11 2014 04:42 Jun 15, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3268.IH H3268 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3268 IH ‘‘(iv) provides self-certification that 1 the principal source of income and liveli- 2 hood of the individual are dependent upon 3 the individual’s employment for wages or 4 the individual’s performance of service in 5 self-employment; and’’. 6 (B) in subsection (f)(1), by inserting 7 ‘‘prior to authorizing benefits’’ after ‘‘valida- 8 tion’’; and 9 (C) in subsection (f)(2)(B), by striking the 10 period at the end and inserting at the end the 11 following: ‘‘: Provided, That such expenses shall 12 be claimed by States on a reimbursable basis 13 and shall not be subject to restrictions imposed 14 by the Department of Labor’s resource jus- 15 tification model.’’. 16 (2) EFFECTIVE DATE.—The amendments made 17 by paragraph (1) shall apply to individuals who 18 apply for pandemic unemployment assistance on or 19 after the date that is 30 days after the date of en- 20 actment of this Act 21 (b) LIMITATION ON BACKDATING CLAIMS FOR PAN- 22 DEMIC UNEMPLOYMENT ASSISTANCE.—In the case of a 23 covered individual whose first application for pandemic 24 unemployment assistance under section 2102 of the 25 VerDate Sep 11 2014 04:42 Jun 15, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3268.IH H3268 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3268 IH CARES Act is filed after the date of enactment of this 1 Act, subsection (c)(1)(A)(i) of such section 2102 of the 2 CARES Act shall be applied by substituting ‘‘April 1, 3 2021’’ for ‘‘January 27, 2020’’. 4 (c) APPLICATION DEADLINE FOR PANDEMIC UNEM- 5 PLOYMENT ASSISTANCE.—Subsection (c) of section 2102 6 of the CARES Act (15 U.S.C. 9021) is amended by add- 7 ing at the end the following: 8 ‘‘(7) APPLICATION DEADLINE.—Notwith- 9 standing any other provision of this subsection, no 10 application for pandemic unemployment assistance 11 may be filed after the date that is 14 days after the 12 date specified in paragraph (1)(A)(ii) unless the in- 13 dividual has shown good cause under the applicable 14 State law for failing to file before such date.’’. 15 (d) ISSUANCE OF GUIDANCE.—Section 2102 of the 16 CARES Act (15 U.S.C. 9021) is amended by adding at 17 the end the following: 18 ‘‘(i) DEPARTMENT OF LABOR GUIDANCE ON 19 VERIFICATION OF ELIGIBILITY FOR PANDEMIC UNEM- 20 PLOYMENT ASSISTANCE PRIOR TO AUTHORIZING BENE- 21 FITS.—Not later than 60 days after the enactment of this 22 subsection, the Secretary of Labor, in consultation with 23 the Director of the National Institute of Standards and 24 Technology, shall issue guidance to State workforce agen- 25 VerDate Sep 11 2014 04:42 Jun 15, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3268.IH H3268 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 3268 IH cies outlining the latest industry practices with regard to 1 cybersecurity, digital identity proofing services, standards 2 for privacy, and procedures for verifying and validating 3 the identity of individuals, pursuant to subsection (f)(1), 4 and the availability of third-party income verification tech- 5 nology to prevent fraud in the pandemic unemployment 6 assistance program.’’. 7 SEC. 3. LIMITATION ON PAYMENTS OF FEDERAL PANDEMIC 8 UNEMPLOYMENT COMPENSATION. 9 Subsection (b) of 2104 of the CARES Act (15 U.S.C. 10 9023) is amended by adding at the end the following: 11 ‘‘(5) LIMITATION.—Notwithstanding any other 12 provision of this subsection, no Federal pandemic 13 unemployment compensation may be paid retro- 14 actively for a week of unemployment to claimants 15 who apply for regular compensation for such week 16 more than 14 days after the dates specified in 17 clauses (i) and (ii) of subsection (b)(3)(A) with re- 18 spect to such week.’’. 19 SEC. 4. PREVENTING UNEMPLOYMENT COMPENSATION 20 FRAUD AND IMPROPER PAYMENTS THROUGH 21 DATA MATCHING. 22 (a) UNEMPLOYMENT COMPENSATION DATA INTEG- 23 RITY HUB.— 24 VerDate Sep 11 2014 04:42 Jun 15, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3268.IH H3268 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 3268 IH (1) IN GENERAL.—Section 303(a) of the Social 1 Security Act (42 U.S.C. 503(a)) is amended by add- 2 ing at the end the following: 3 ‘‘(13) The State agency charged with adminis- 4 tration of the State law shall use the system des- 5 ignated by the Secretary of Labor for cross-match- 6 ing claimants of unemployment compensation under 7 State law against any databases in the system to 8 prevent and detect fraud and improper payments.’’. 9 (b) USE OF UNEMPLOYMENT CLAIMS DATA TO PRE- 10 VENT AND DETECT FRAUD.—Section 303 of the Social 11 Security Act (42 U.S.C. 503) is amended by adding at 12 the end the following: 13 ‘‘(n) USE OF UNEMPLOYMENT CLAIMS DATA TO 14 PREVENT AND DETECT FRAUD.—The Inspector General 15 of the Department of Labor shall, for the purpose of con- 16 ducting audits, investigations, and other oversight activi- 17 ties authorized under the Inspector General Act of 1978 18 (5 U.S.C. App.) relating to unemployment compensation 19 programs, have direct access to each of the following sys- 20 tems: 21 ‘‘(1) The system designated by the Secretary of 22 Labor for the electronic transmission of requests for 23 information relating to interstate claims for unem- 24 ployment compensation. 25 VerDate Sep 11 2014 04:42 Jun 15, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3268.IH H3268 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 3268 IH ‘‘(2) The system designated by the Secretary of 1 Labor for cross-matching claimants of unemploy- 2 ment compensation under State law against data- 3 bases to prevent and detect fraud and improper pay- 4 ments (as described in subsection (a)(13)).’’. 5 (c) USE OF FRAUD PREVENTION AND DETECTION 6 SYSTEMS IN ADMINISTRATION OF UNEMPLOYMENT COM- 7 PENSATION PROGRAMS.— 8 (1) IN GENERAL.—Section 303 of the Social 9 Security Act (42 U.S.C. 503), as amended by sub- 10 section (b), is further amended by adding at the end 11 the following: 12 ‘‘(o) STATE USE OF FRAUD PREVENTION AND DE- 13 TECTION SYSTEMS.— 14 ‘‘(1) IN GENERAL.—The State agency charged 15 with administration of the State law shall establish 16 procedures to do the following: 17 ‘‘(A) NATIONAL DIRECTORY OF NEW 18 HIRES.—Use the National Directory of New 19 Hires established under section 453(i)— 20 ‘‘(i) to compare information in such 21 Directory against information about indi- 22 viduals claiming unemployment compensa- 23 tion to identify any such individuals who 24 may have become employed, in accordance 25 VerDate Sep 11 2014 04:42 Jun 15, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3268.IH H3268 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 3268 IH with any regulations that the Secretary of 1 Health and Human Services may issue and 2 consistent with the computer matching 3 provisions of the Privacy Act of 1974; 4 ‘‘(ii) to take timely action to verify 5 whether the individuals identified pursuant 6 to clause (i) are employed; and 7 ‘‘(iii) upon verification pursuant to 8 clause (ii), to take appropriate action to 9 suspend or modify unemployment com- 10 pensation payments, and to initiate recov- 11 ery of any improper unemployment com- 12 pensation payments that have been made. 13 ‘‘(B) STATE INFORMATION DATA EX- 14 CHANGE SYSTEM.—Use the Department of La- 15 bor’s State Information Data Exchange System 16 to facilitate employer responses to requests for 17 information from State workforce agencies. 18 ‘‘(C) INCARCERATED INDIVIDUALS.—Seek 19 information from the Commissioner of Social 20 Security under sections 202(x)(3)(B)(iv) and 21 1611(e)(1)(I)(iii), and from such other sources 22 as the State agency determines appropriate, to 23 obtain the information necessary to carry out 24 the provisions of a State law under which an in- 25 VerDate Sep 11 2014 04:42 Jun 15, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3268.IH H3268 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 3268 IH dividual who is confined in a jail, prison, or 1 other penal institution or correctional facility is 2 ineligible for unemployment compensation on 3 account of such individuals inability to satisfy 4 the requirement under subsection (a)(12). 5 ‘‘(D) DECEASED INDIVIDUALS.—Compare 6 information of individuals claiming unemploy- 7 ment compensation against the information re- 8 garding deceased individuals furnished to or 9 maintained by the Commissioner of Social Se- 10 curity under section 205(r). 11 ‘‘(2) ENFORCEMENT.—Whenever the Secretary 12 of Labor, after reasonable notice and opportunity for 13 hearing to the State agency charged with the admin- 14 istration of the State law, finds that the State agen- 15 cy fails to comply substantially with the require- 16 ments of paragraph (1), the Secretary of Labor shall 17 notify such State agency that further payments will 18 not be made to the State until the Secretary of 19 Labor is satisfied that there is no longer any such 20 failure. Until the Secretary of Labor is so satisfied, 21 such Secretary shall make no future certification to 22 the Secretary of the Treasury with respect to such 23 State. 24 VerDate Sep 11 2014 04:42 Jun 15, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3268.IH H3268 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 3268 IH ‘‘(3) UNEMPLOYMENT COMPENSATION.—For 1 the purposes of this subsection, any reference to un- 2 employment compensation described in this para- 3 graph shall be considered to refer to— 4 ‘‘(A) regular or extended compensation (as 5 defined by section 205 of the Federal-State Ex- 6 tended Unemployment Compensation Act of 7 1970); 8 ‘‘(B) regular compensation (as defined by 9 section 85(b) of the Internal Revenue Code of 10 1986) provided under any program adminis- 11 tered by a State under an agreement with the 12 Secretary; 13 ‘‘(C) pandemic unemployment assistance 14 under section 2102 of the Relief for Workers 15 Affected by Coronavirus Act (15 U.S.C. 9021); 16 ‘‘(D) pandemic emergency unemployment 17 compensation under section 2107 of the Relief 18 for Workers Affected by Coronavirus Act (15 19 U.S.C. 2025); and 20 ‘‘(E) short-time compensation under a 21 short-time compensation program (as defined in 22 section 3306(v) of the Internal Revenue Code of 23 1986).’’. 24 VerDate Sep 11 2014 04:42 Jun 15, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3268.IH H3268 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 3268 IH (d) EFFECTIVE DATE.—The amendments made by 1 subsections (a) and (c) shall take effect with respect to 2 each State to weeks of unemployment beginning on or 3 after the earlier of— 4 (1) the date the State changes its statutes, reg- 5 ulations, or policies in order to comply with such 6 amendment; or 7 (2) October 1, 2022. 8 SEC. 5. RECOVERING FRAUDULENT COVID UNEMPLOY- 9 MENT COMPENSATION BENEFIT PAYMENTS. 10 (a) STATE UNEMPLOYMENT FRAUD RECOUPMENT 11 PLANS.— 12 (1) IN GENERAL.—Section 2118(b)(3) of the 13 CARES Act (15 U.S.C. 9034(b)(3)) is amended to 14 read as follows: 15 ‘‘(3) to make grants to States or territories ad- 16 ministering unemployment compensation programs 17 described in subsection (a) (including territories ad- 18 ministering the Pandemic Unemployment Assistance 19 program under section 2102) for such purposes, in- 20 cluding for— 21 ‘‘(A) building State capacity to prevent 22 and reduce unemployment fraud through— 23 ‘‘(i) the procurement [Text truncated for display. Full text available on Congress.gov.]