Interstate UI overpayment detection and recovery

Employment and Training Administration, Advisory System U.S. Department of Labor Washington, D.C. 20210 Classification: UI Correspondence symbol: OWS/DUIO Date: August 22, 2005 Rescissions: None Expiration date: August 22, 2006

ADVISORY: UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 30-05

TO: STATE WORKFORCE AGENCIES

FROM: CHERYL ATKINSON /s/
Administrator
Office of Workforce Security

SUBJECT: Interstate and Combined Wage Claim Overpayment Detection, Recovery, and Reporting

1. Purpose. To encourage states to participate in interstate overpayment
   detection and recovery activities for state and federal programs and to remind states about the requirements for reporting information related to these activities.

2. References. Section 303(g) of the Social Security Act (SSA); Section 3304(a)(9)(B)
   of the Federal Unemployment Tax Act (FUTA); 20 CFR 616; ET Handbooks Nos. 392, 399 and 401; UIPL No. 50-86; UIPL No. 23-87; and UIPL No. 31-04.

3. Background. Prevention, detection and recovery of unemployment insurance (UI)
   overpayments is a top priority for the Department of Labor. In 1986, Section 303(g) was added to the Social Security Act which allowed for the development and implementation of the Interstate Reciprocal Overpayment Recovery Arrangement (IRORA) under which participating states recover overpayments for each other. Tools available to states include the Quarterly Interstate Crossmatch/Claimant Locator and the Interstate Inquiry (IBIQ), which provide access to other states’ wage and claim data in order to: a) detect overpayments to individuals who are working in one state and claiming benefits in another; and b) locate individuals who owe overpayments in one state and are working or claiming benefits in another. More detailed information about the opportunities and requirements relating to interstate overpayment detection and recovery, including federal programs, is provided below.

4. Overpayment Recovery Requirements/Agreements.

   A. Combined Wage Program Requirements 20 CFR 616.7(d) and 20 CFR 616.8(e).

Section 3304(a)(9)(B) of the FUTA requires each state to participate in the combined wage program, as prescribed by the Secretary of Labor in consultation with the states, as a condition of state law approval. Federal regulations at 20 CFR 616 contain the requirements of the CWC program. The regulation at 20 CFR 616.8(e) requires the paying state on a CWC to recover outstanding overpayments for states that transfer wages for use on the CWC under the paying state’s law, unless the paying state’s law prohibits recovery of overpayments for another state. This means that if there is no specific prohibition(s) in the paying state’s law, the state is required to recover overpayments for wage transferring states that meet the specified conditions.

In providing for the withdrawal of a CWC, 20 CFR 616.7(d) stipulates, that as a condition of withdrawal, the claimant can authorize the state accepting the substitute claim to withhold benefits payable in an amount sufficient to recover and reimburse benefits paid by a former paying state. This is in addition to the provision requiring interstate overpayment recovery for a transferring state. The procedures required by these provisions should have been in place in states since the early 1970s. There is no relationship between this requirement and IRORA. Recovery under this requirement takes precedent over recoveries under IRORA.

B. Interstate Reciprocal Overpayment Recovery Arrangement (IRORA). Effective in 1987, the IRORA is the states’ voluntary agreement to recover overpayments on an interstate basis under the provisions of Section 303(g)(1) of the SSA. That section of the SSA is a permissive provision that allows a state to offset benefits otherwise payable to an individual to recover an overpayment under another state’s law. Procedures and forms for handling interstate overpayment recovery under this agreement are published in ET Handbook No. 392, Section IX. A copy of the agreement and the suggested regulations for implementing the agreement are also published in this Handbook in Appendix B. To date, thirty-three (33) states have signed the IRORA. The twenty (20) states that have not signed this agreement are indicated in Attachment A.

C. Cross-Program Overpayment Recovery Agreement (CPORA) Between the States and the U.S. Department of Labor. The CPORA is a reciprocal agreement between a state and the U.S. Department of Labor that allows the state to offset Federal benefits to recover state UI overpayments and to offset state UI benefits to recover Federal benefit overpayments. The CPORA resulted from the same amendment to the Social Security Act as IRORA. It is relevant to this UIPL because it impacts interstate activities under IRORA, i.e., a state that has signed the CPORA and IRORA cannot offset Federal benefits to recover a state UI overpayment for a state which has signed the IRORA but has not signed the CPORA. To date, 48 states have signed the CPORA. The five (5) states that have not signed the CPORA are listed in Attachment A. These states have also not signed IRORA.

5. Quarterly Interstate Crossmatch/Claimant Locator (ICCL). The ICCL has been
   operational since 1984 and is run quarterly to match interstate claims against the wage and benefit files of the state (agent state) from which the interstate claim is filed by the claimant. It is also used by some states to conduct border crossmatches. In addition to providing a method for crossmatching weeks claimed against other states’ wage and benefit files for fraud and overpayment detection, the ICCL’s locator feature allows states to match the social security number of an individual with existing overpayments against the wage and benefit files of other states to locate individuals that may have moved. During the past year, the number of records matched per quarter has ranged from 0.8 to 1.2 million with “hits” ranging from 114,000 to 182,000.

Attachment B to this UIPL provides information about the ICCL activities during FY 2004. The dramatic reduction in the number of records distributed for matching after the 4th quarter 2003 cycle is the result of states using the Wage Record Interchange System, Distributive Data Base Index (DDBI) for unemployment insurance purposes. Beginning with the 1st quarter 2004 cycle, matching of the incoming request against the DDBI eliminated the forwarding of crossmatch (Type 1) requests where there was no match on the state provided DDBI index, and it dramatically decreased the number of locator (Type 3) records that needed to be replicated for nationwide broadcasting.

6. Reporting of Interstate BPC Activities. Since the implementation of the ICCL,
   millions of dollars in overpayments have been established for claimants that are no longer in the liable (paying) state or subject to the laws of the state where the overpayment exists. To monitor interstate activities, the ETA 227, Overpayment Detection and Recovery Activities, report has been revised to capture information on the number of cases detected via the Quarterly Interstate Crossmatch/Claimant Locator, and the number of cases investigated and the resulting establishment of fraud and nonfraud overpayments.

Page 1 to Attachment C shows $9.7 million in overpayments detected and established as a result of interstate crossmatching in CY 2004. This is a significant dollar amount even though 10 states are not yet reporting any information, and many states are not reporting all required information.

7. Summary. The level of overpayments established as a result of interstate
   crossmatching suggests that participation in the interstate and cross-program overpayment recovery agreements aid significantly in a state’s ability to recover overpayments from individuals that are no longer in the state. The Department of Labor encourages all states to participate in both agreements because full participation of states in these agreements significantly expands use of the benefit offset recovery method, contributes to the strengthening of states’ unemployment funds, and has the potential to reduce employers’ taxes.

8. Action Required. State administrators are requested to: 1) provide this information

to appropriate staff, including interstate and benefit payment control staff; 2) support full implementation of these agreements; and 3) ensure that reporting requirements for the ETA 227, Overpayment Detection and Recovery Activities are met.

9. Inquiries. Questions should be directed to the appropriate ETA Regional Office.

Attachments: A - Chart of IRORA and CPORA Participating States B - Chart of Quarterly Interstate Crossmatch/Locator Data for FY 2004 C - Charts of Interstate Activity Reported via the ETA-227 Report, Overpayment Detection and Recovery Activities for FY 04

Attachment A to UIPL No. 30-05

INTERSTATE RECIPROCAL OVERPAYMENT RECOVERY ARRANGEMENT CROSS-PROGRAM OVERPAYMENT OFFSET AGREEMENT

Participating States - as of June 2005
State IRORA CPORA
AL X X AK X X AZ X X
AR
X
CA
X
CO X X
CT
Withdrew 10/87
DE
X
DC X X
FL
X
GA
X
HI X X ID X X
IL
X
IN X X IA X X
KS
X
KY
X
LA
X
ME
MD X X
MA
X
MI
MN X X MS X X MO X X MT X X NE X X NV X X NH
NJ
X
NM
X
NY
X
NC X X ND X X OH X X OK X X OR X X
PA
X
PR
RI
X
SC X X SD X X TN X X TX X X UT X X VT X X VA X X VI X X

WA X X
WV X X
WI X X
WY X X
Total 33 48

Attachment B to UIPL No. 30-05

Quarterly Interstate Crossmatch/Locator – FY 2004

               4th Qtr 03   1st Qtr 04      2nd Qtr 04    3rd Qtr 04         Total

Incoming
Requests
Xmatch - Type 1 892,706 915,606 671,458 593,188 3,072,958 Locator - Type 3 333,919 350,135 292,264 273,698 1,250,016 Total Records 1,226,625 1,265,741 963,722 866,886 4,322,974

Matched
Against DDBI
Xmatch - Type 1 N/A 834,576 670,752 592,599 1,487,927 Locator –Type 3 N/A 350,046 292,187 273,630 915,863
Total Records N/A 1,184,622 962,939 866,229 2,403,790

Hit from DDBI
Xmatch - Type 1 N/A 12,568 2,234 2,075 16,877 Locator – Type 3 N/A 59,744 60,097 56,768 176,609
Total Records N/A 72,312 62,331 58,843 193,486

Requests
Distributed to
States
Xmatch - Type 1 1,145,768 956,927 692,951 605,956 3,401,602 Locator – Type 3 11,732,062 1,772,835 1,244,674 1,126,024 15,875,595 Total Records 12,877,830 2,729,962 1,937,625 1,731,980 19,277,197

Responses
Xmatch - Type 2 88,576 97,199 65,639 58,660 310,074 Locator - Type 4 93,088 64,268 59,424 55,120 271,900 Total Records 181,664 161,467 125,063 113,780 581,974

Page 1 of Attachment C, UIPL No. 30-05

Overpayment Cases Detected VIA Interstate Crossmatch January 1, 2004 – December 31, 2004
ETA 227 Report – Line 203
Number of
Cases FRAUD NONFRAUD
Investigated
ST Total Cases Dollars Cases Dollars AK 0 139 $ 257551 117 $ 32491 AL 0 0 0 0 0 AR 0 0 0 0 0 AZ 0 492 391708 143 30311 CA 231 223 291910 8 8123 CO 0 35 87732 21 17803 CT 0 0 0 0 0 DC 0 0 0 1 2727 DE 0 0 0 0 0 FL 1396 15 24109 11 10046 GA 0 0 0 4 3302 HI 0 0 0 1 324 IA 260 248 202626 102 22866 ID 111 39 71543 6 0 IL 1527 512 1059098 936 318739 IN 148 95 256849 120 63247 KS 8806 116 267926 61 24788 KY 0 0 0 0 0 LA 1 0 0 2 238 MA 0 0 0 7 15697 MD 0 0 0 11 5927 ME 0 1 2279 10 5529 MI 0 27 42856 122 88300 MN 0 0 0 0 0 MO 574 25 49650 4 1176 MS 12526 509 246825 73 6558 MT 16 7 1125 9 1011 NC 802 114 239397 7 8709 ND 1 0 0 1 26 NE 524 39 63927 48 14191 NH 0 0 0 0 0 NJ 3823 118 428299 370 809356 NM 96 0 0 0 0 NV 0 0 0 0 0 NY 0 359 553424 11 26086 OH 162 99 173092 17 15162 OK 484 0 0 0 0 OR 1553 379 537391 25 10013 PA 4014 6 21240 20 30445 RI 0 0 0 0 0 SC 3216 198 277212 374 135320 SD 153 70 54248 36 18024 TN 642 219 292394 235 67687 TX 10265 48 134303 326 152753 UT 0 118 115311 14 2095 VA 733 207 280207 328 129304 VT 0 0 0 0 0 WA 3216 367 743785 378 267714 WI 142 64 106124 78 31507 WV 151 24 37549 10 3638 WY 0 24 26671 0 0 US 58573 4936 $ 7,338,561 4047 $ 2,381,233

Page 2 of Attachment C, UIPL No. 30-05

Overpayment Amounts Recovered For State By Other States January 1, 2004 – December 31, 2004
ETA 227 Report – Line 306

FRAUD
NONFRAUD
ST UI UCFE/X UI UCFE/X AK $ 3833 $ 464 $ 5370 $ 873 AL 0 0 4608 0 AR 0 0 0 0 AZ 10974 0 6376 0 CA 36652 5070 10449 238 CO 0 0 0 0 CT 0 0 0 0 DC 0 0 0 0 DE 0 0 0 0 FL 0 0 7603 0 GA 0 0 0 0 HI 3265 0 0 0 IA 7248 0 24941 0 ID 7212 0 2155 0 IL 0 0 0 0 IN 215 0 148 0 KS 12704 0 18347 2379 KY 0 0 0 0 LA 4434 0 14702 0 MA 0 0 0 0 MD 37273 0 77037 0 ME 0 0 0 0 MI 0 0 0 0 MN 5525 0 9117 0 MO 118657 5520 35475 2337 MS 13780 0 9529 0 MT 0 0 6553 273 NC 11426 793 22629 141 ND 0 0 0 0 NE 6245 0 4959 0 NH 0 0 0 0 NJ 0 0 0 0 NM 0 0 0 0 NV 0 0 0 0 NY 0 0 0 0 OH 1358 0 6771 0 OK 3555 0 6375 0 OR 22596 0 7016 0 PA 0 0 0 0 RI 0 0 0 0 SC 0 0 0 0 SD 3752 0 1085 0 TN 0 0 0 0 TX 25889 0 60158 0 UT 0 0 0 0 VA 2717 0 25600 0 VT 0 0 223 0 WA 0 0 0 0 WI 0 0 0 0 WV 15187 0 15562 200 WY 0 0 0 0 US $ 354,497 $ 11,847 $ 382,788 $ 6441

Page 3 to Attachment C, UIPL No. 30-05

Overpayment Amounts Recovered By State For Other States January 1, 2004 – December 31, 2004
ETA 227 Report – Line 321
FRAUD
NONFRAUD
ST UI UCFE/X UI UCFE/X AK $ 6600 $0 $0 $0 AL 0 0 0 0 AR 0 0 0 0 AZ 4579 0 4061 0 CA 0 0 0 0 CO 16038 0 1048770 0 CT 0 0 0 0 DC 618 0 66023 13326 DE 0 0 0 0 FL 0 0 0 0 GA 0 0 0 0 HI 0 0 0 0 IA 0 0 0 0 ID 0 0 0 0 IL 0 0 0 0 IN 0 0 15869 0 KS 106575 999 50254 302 KY 0 0 0 0 LA 0 0 0 0 MA 0 0 0 0 MD 519 0 330553 0 ME 0 0 0 0 MI 0 0 0 0 MN 33646 0 30288 380 MO 21605 0 45522 1404 MS 1067 0 11261 0 MT 767 0 14413 0 NC 2693 0 8658 0 ND 350 0 8557 0 NE 2155 0 6490 2733 NH 0 0 0 0 NJ 0 0 0 0 NM 0 0 0 0 NV 0 0 0 0 NY 0 0 0 0 OH 4332 0 3327 379 OK 0 0 0 0 OR 9732 843247 5605 0 PA 0 0 0 0 RI 0 0 0 0 SC 0 0 0 0 SD 0 0 2734 0 TN 0 0 0 0 TX 17151 0 21008 0 UT 0 0 7512 8473 VA 8290 0 112982 0 VT 0 0 198 0 WA 6248 0 2108 0 WI 0 0 0 0 WV 0 0 4716 0 WY 762 0 728 0 US $ 243,727 $844,246 $1,802,684 $26,997