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September 21, 2022 Office of Public Affairs: dhs-oig.officepublicaffairs@oig.dhs.gov
The Federal Emergency Management Agency (FEMA) did not implement controls that may have prevented the 21 state workforce agencies (SWA) in our review from distributing more than $3.7 billion in improper payments through its Lost Wages Assistance (LWA) program. These 21 SWAs distributed more than 80 percent of the $36.5 billion of LWA — approximately $30 billion in total — and later detected $3.3 billion in potentially fraudulent payments. In addition, we identified $21.6 million in overpayments and $403 million in payments made without obtaining claimants’ required selfcertifications of eligibility for LWA.
This occurred because FEMA launched the LWA program in 11 days, in response to the unprecedented pandemic, without developing and implementing clear guidance for the program or verifying and monitoring the SWAs’ controls to ensure they prevented and mitigated improper payments. Instead, FEMA integrated LWA into SWAs’ unemployment insurance (UI) program. Many SWAs did not have sufficient controls to prevent fraudulent activities or overpayments, and they relied on self-certifications. Despite repeated warnings from the Department of Labor and our office that self-certifications are not reliably accurate and may lead to improper payments, FEMA did not require controls to mitigate the unreliability of self-certifications to determine claimants’ eligibility.
By relying on the states’ UI programs (which are susceptible to fraud) to determine claimants’ eligibility and distribute LWA, FEMA lost an opportunity to safeguard $36.5 billion in disbursed LWA, directly affecting its ability to respond to future emergencies and disasters. As a result, we question the more than $3.7 billion in improper payments distributed by the 21 SWAs that we reviewed.
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