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ARIZONA STATE SENATE
Fifty-Fifth Legislature, First Regular Session
AMENDED
unemployment insurance; fraud prevention
Purpose
Effective January 1, 2022, outlines fraud prevention measures for the Department of Economic Security (DES) relating to the Unemployment Insurance Program (UI Program) and requires DES to recover improper overpayments to the fullest extent except as outlined. Prescribes fraud prevention reporting requirements.
Background
The federally-established UI Program, administered by DES according to state law, provides unemployment benefits to persons unemployed through no fault of their own. Benefit payments are paid from Arizona's Unemployment Insurance Trust Fund which is funded by a tax paid by employers (A.R.S. Title 23, Chapter 4). DES also administers the federally-funded Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation and Federal Pandemic Unemployment Compensation Programs (P.L. 116-159, 116th Congress, 2020).
A DES representative must promptly examine an unemployment insurance benefits claim to determine claim validity and promptly notify the claimant of the determination. Statute prescribes eligibility requirements relating to the reason the individual was separated from employment, wages earned prior to unemployment and the individual's availability and work search activities (A.R.S. §§ 23-771; 23-773; and 23-779).
A person is liable to repay to DES any amount of unemployment insurance benefits the person receives to which they are not entitled. DES may waive all or part of the overpaid amount if the person receives an overpayment of benefits without any fault of their own and repayment or deduction from future benefits would be against equity and good conscience. If a person receives benefits through commission of fraud, DES must assess a penalty of 15 percent of the fraudulent amount. Fraud overpayments and penalties may not be waived (A.R.S. § 23-787).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires DES, on a weekly basis, to:
a) use a database that provides cross-matching functions for fraud prevention and detection to verify the integrity of Arizona's unemployment insurance rolls;
b) check the unemployment insurance rolls against the Arizona Department of Corrections list of incarcerated individuals to verify eligibility and ensure UI Program integrity; and
c) check new hire records against the National Directory of New Hires to verify eligibility.
2. Directs DES to review an individual's case if DES receives information that indicates a change in the circumstances of an individual enrolled in the UI Program that may affect eligibility.
3. Requires DES to:
a) adopt and implement internal administrative policies to recover improper overpayments of benefits to the fullest extent possible by state and federal law, unless DES has granted a waiver; and
b) recover improper benefit overpayments unless DES has granted a waiver or doing so would violate existing state or federal law.
4. Directs DES to annually provide a written report to the Governor, the President of the Senate and the Speaker of the House of Representatives addressing the implementation and enforcement of prescribed fraud prevention measures, including:
a) the type and amount of improper payments detected retroactively;
b) the type and amount of improper payments prevented;
c) monies saved in preventing improper overpayments and, if any, in recouping improper overpayments; and
d) an explanation for nonrecovery of overpayments, including the application of any allowable recovery exceptions.
5. Allows DES to execute a memorandum of understanding with any department, agency or division for information required to be shared between agencies.
6. Requires DES to adopt any rules necessary to carry out fraud prevention measures.
7. Defines unemployment insurance rolls as jobless workers receiving unemployment insurance in Arizona.
8. Defines new hire records as the directory of newly hired and rehired employees reported under state and federal law and managed by DES.
9. Specifies that the legislation may be cited as the Unemployment Insurance Program Integrity Act of 2021.
10. Becomes effective on January 1, 2022.
Amendments Adopted by Committee
· Specifies that the requirements relating to recovery of improper benefit overpayments do not apply if DES has granted a waiver for overpaid amounts.
Senate Action House Action
COM 3/17/21 DPA 7-2-0 HHS 2/15/21 DPA 8-1-0-0
3rd Read 3/3/21 44-15-1
Prepared by Senate Research
March 23, 2021
LB/kja