White House Proposes Spending $1.6B to Combat COVID Fraud

A fact sheet released by the administration outlines the following proposed investments:

• $600M - Ensuring resources and time for investigations and prosecution of those engaged in major or systemic pandemic fraud
• $600M - Investing in fraud prevention and identity theft
• $400M - Helping victims of identity theft

According to the White House, it is critical to provide agency watchdogs, law enforcement, investigators, and prosecutors with resources to pursue and prosecute pandemic fraud. The plan proposes to triple COVID-19 Fraud Strike Force Teams, increase the statute of limitations for serious pandemic fraud, pass legislation to increase the cap in the Fraud Civil Remedies Act, ensure that the Department of Labor (DOL) Office of Inspector General (OIG) can easily access multi-state data, and provide at least $300M for the Pandemic Inspectors General and Pandemic Response Accountability Committee (PRAC) investigative staff.

To prevent fraud and identity theft, the White House plan proposes to expand the PRAC’s Pandemic Analytics Center of Excellence (PACE), expand Treasury’s Do Not Pay Service, increase the checking of tax transcripts, and provide at least $300M to prevent identity theft in public benefits. Additionally, the proposal would invest $150M to ensure lessons learned are applied going forward, formalize “Gold Standard” meetings, and strengthen the unemployment systems’ program integrity and fraud prevention.

To strengthen program integrity in the Unemployment Insurance (UI) system, the administration wants to provide new UI program integrity resources for states in the FY 2024 budget and designate $1.6B in American Rescue Plan funds to be available to states to modernize, improve access, and prevent fraud and identity theft. Suggested investments stemming from the American Rescue Plan funds for states include:

• $246M - For tiger teams to help states identify risks and implement fraud prevention solutions
• $380M - For anti-fraud grants and identity theft prevention
• $600M - To modernize vulnerable state IT systems and improve program integrity
• $100M - For solutions to help states reduce common mistakes and improper payments
• $249M - For equity enhancements that improve payment accuracy

To help victims of identity theft, the administration proposes to pilot an identity theft early warning system, provide a one-stop remediation experience for victims, and offer grants for additional services to victims.

According to Gene Sperling, White House American Rescue Plan coordinator and senior advisor to the president, quoted in an article in Government Executive, the White House consulted with the top members of the oversight community to develop the fraud proposal.  The $1.6B proposal, according to Sperling, is a separate spending proposal and not part of the appropriations process, but there will be related investments proposed in the president’s FY 2024 budget request to be released this week.

Former PRAC Deputy Executive Director Linda Miller in a recent Federal News Network interview said the White House fraud proposal focuses mainly on addressing current incidents of fraud, and less on stemming program weaknesses leading to fraud. “There’s very little money or direction given to the agencies that are actually needing to do the work of preventing fraud. It’s a lot of focus on the PRAC and the IGs, and I think that’s a missed opportunity,” she said in the interview.

As mentioned in my other blogs about waste, fraud, and abuse, Deltek believes continued federal efforts to curb improper payments could lead to contracting opportunities at the federal and state levels for forensic accounting, investigators, claims analysts, and IT products and services, such as analytics, AI, and blockchain solutions.