Bush, Chao Focus on Fraud and Abuse in DOL Programs

According to BNA, the FY 2002 budget “blueprint” suggests that attention is being paid early in the Bush administration to longstanding concerns regarding a variety of Dep’t of Labor programs that may be subject to fraud and abuse.  Issued Feb. 28, the preliminary budget referred to three areas identified in the past by the DOL’s inspector general as in need of attention. These include programs that provide benefits to workers, such as the unemployment insurance (UI) program; administration of grant funds; and foreign labor certification programs.  DOL IG Gordon Heddell’s spokesman said he “looks forward to working with” Labor Secretary Elaine L. Chao “and her management team to address these longstanding issues.” Heddell, a 28-year veteran of the federal law enforcement system was confirmed IG by the Senate on Dec. 15.

DOL’s portion of the Bush administration’s budget proposal stated that the inspector general “continues to be concerned about the ease with which” worker benefit funds “can be defrauded by claimants and medical providers, as well as other weaknesses that can lead to waste of program funds.” In addition to the UI program, the budget singled out the black lung benefit program and the Fed. Employee Comp. Act program. Other worker benefit programs administered by DOL include employee pension plans and the Longshore & Harbor Workers’ Compensation program.

In its latest semiannual report, released in Dec. 2000, the office of inspector general said it continues “to see a multiplicity of schemes used to defraud the UI program, including fraudulent employer schemes, internal embezzlement schemes, and the fraudulent collection of UI benefits by illegal aliens and other ineligible claimants.” The report, which covered the second half of fiscal year 2000, also cited a number of systemic weaknesses posing problems for the UI system.
 These include the “loss of contributions due to the inability of states to search for hidden wages by employers who misclassify workers as independent contractors,” and problems with a relatively new system allowing those seeking to file claims for UI benefits to do so by telephone rather than in person. The concerns regarding the UI program are not new. The IG in 1999 highlighted DOL’s estimates that overpayments of UI benefits result in losses of approximately $500 million a year, only half of which is eventually recovered.

The IG’s latest report also said there continues to be “a significant amount of healthcare fraud in both DOL-related health plans and union-related health plans, resulting in millions of dollars in losses to the Federal government and private insurance companies.”  The report said the IG also has documented “that vast sums of money in union-sponsored employee benefit plans remain vulnerable to corrupt plan officials, service providers, and organized crime elements.”

 The Bush budget plan also pointed out that DOL’s “administration of roughly $ 9 billion in grant funds” annually is another area of longstanding concern to the IG. DOL needs to ensure that all grantee cost reports are entered into its financial system in a timely manner “to ensure accountability over the billions of dollars involved,” the budget said. It also called for “more attention to grant management” in such areas as the youth opportunity and welfare-to-work grants programs.

“With billions of dollars invested in various grants programs, it is vital for the Department to ensure that grant programs have the necessary financial systems, policies, and monitoring to ensure results-oriented accountability and performance,” the latest IG report said. For more than three years, DOL has been emphasizing the need for better grant management to ensure that employment and training funds, which make up the bulk of DOL grants, are spent properly and that misspent funds are recovered and used to serve those for whom they were intended. [BNA  3/5/01]