[Federal Register Volume 65, Number 192 (Tuesday, October 3, 2000)]
[Notices]
[Pages 59021-59025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25354]



[[Page 59021]]

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DEPARTMENT OF LABOR

Employment and Training Administration


Unemployment Compensation Denied Claims Accuracy: Proposed 
Information Collection and Request for Public Comment

AGENCY: Employment and Training Administration (ETA), Labor.

ACTION: Notice and request for comments.

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SUMMARY: The Department of Labor, as part of its continuing effort to 
reduce paperwork and respondent burden, conducts a preclearance 
consultation program to provide the general public and Federal agencies 
with an opportunity to comment on proposed and/or continuing 
collections of information in accordance with the Paperwork Reduction 
Act of 1995 (PRA95) (44 U.S.C. 3506(c)(2)(A)). This program helps to 
ensure that the requested data can be provided in the desired format, 
reporting burden (time and financial resources) is minimized, 
collection instruments are clearly understood, and the impact of 
collection requirements on respondents can be properly assessed.
    ETA is soliciting comments concerning the proposed new collection 
of information on the accuracy of decisions to deny claims for 
unemployment compensation (UC). ETA is seeking Office of Management and 
Budget (OMB) approval under the PRA95 to establish Denied Claims 
Accuracy (DCA) as a component of the quality control (QC) program in 
the Federal-State unemployment insurance system (20 CFR Part 602). A 
copy of the proposed data collection instrument is available on the ETA 
Office of Workforce Security (OWS) Web site, http://workforcesecurity.doleta.gov/, or can be can be obtained by contacting 
the office listed in the Addresses section below.

DATES: Written comments must be submitted to the office listed in the 
Addresses section below on or before December 4, 2000.

ADDRESSES: All comments about this proposed collection of information 
should be addressed to: Andrew W. Spisak, Office of Workforce Security, 
Employment and Training Administration, U.S. Department of Labor, Room 
S-4231, 200 Constitution Avenue, NW., Washington, DC 20210.

FOR FURTHER INFORMATION CONTACT: Andrew W. Spisak, telephone: 202-219-
5223, ext. 157 (this is not a toll-free number); fax: 202-219-8506; e-
mail: [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    Since 1987, all State Employment Security Agencies (SESA's), except 
the Virgin Islands, have been required by regulation at 20 CFR Part 602 
to operate a quality control program to assess the accuracy of benefit 
payments in three programs: State Unemployment Insurance (UI), 
Unemployment Compensation for Federal Employees (UCFE), and 
Unemployment Compensation for Ex-Servicemembers (UCX). This program, 
implemented under the Department's authority at Sections 303(a)(1) and 
303(b)(1) of the Social Security Act, was initially called Benefits 
Quality Control but was renamed Benefit Accuracy Measurement (BAM) in 
1996.
    The BAM methodology requires each State to draw weekly samples of 
UC payments. Minimum annual samples are set at 360 cases in the ten 
States with the smallest volume of UC claims and 480 cases in all other 
States. A specially trained staff of investigators reviews agency 
records and contacts the claimant, employer(s) and third parties to 
verify all the information in agency records and obtain additional 
information pertinent to the benefit amount for the sampled week. 
States have the flexibility to verify the UC payment information by 
telephone, mail, e-mail or fax, as they deem appropriate.
    Using the new and verified information, the investigators determine 
what the benefit payment should have been to accord fully with State 
law. Differences between the actual and reconstructed payments are 
coded as underpayment or overpayment errors, and data on payment error 
type (for example, fraud, nonfraud, technically proper), cause, and 
responsible party are recorded in electronic databases in each State 
and in the Department of Labor National Office in Washington, D.C. The 
SESA's and the Department use this information to estimate payment 
accuracy rates, monitor program quality, guide possible future program 
improvements, inform system stakeholders, and perform various analyses. 
The program is operated under OMB approval, OMB number 1205-0245; 
approval expires October 31, 2002.
    During the public consultation process which preceded the 
establishment of the QC/BAM program, several public interest groups 
representing employers, employees, and State government agencies 
proposed underlying principles to govern the program. The Department 
adopted these consensus principles in Unemployment Insurance Program 
Letter (UIPL) No. 4-86 (December 20, 1985).
    In the final rule establishing the QC program for UC, published in 
the Federal Register (FR) at 52 FR 33520 (September 3, 1987), one of 
the consensus principles states that QC would be expanded to include 
the review/investigation of claims that had been denied [52 FR 33522].
    In addition, 20 CFR 602.2 states that:

    Other elements of the QC program (e.g., interstate, extended 
benefits programs, benefit denials, and revenue collections) will be 
phased in under a schedule determined by the Department in 
consultation with State agencies.

    States determine claimant eligibility for UC in three broad areas: 
monetary determinations, separation determinations, and nonseparation 
determinations. Monetary determinations are made when a claim is 
initially filed (or when a claim is made to establish a new benefit 
year) to verify that the claimant has sufficient wage credits in the 
base period and has satisfied other monetary requirements to 
demonstrate attachment to the labor force.
    Separation determinations are made when the claim is initially 
filed or when an additional claim is filed in the claimant's benefit 
year after a period of intervening employment. Separation 
determinations evaluate whether the claimant's unemployment is 
involuntary and through no fault of the claimant.
    Nonseparation determinations verify that the claimant is meeting 
the eligibility requirements of State law for a specific week of 
unemployment.
    In 1986-87, five States conducted a one-year pilot to measure the 
accuracy of decisions to deny UC eligibility for monetary, separation, 
and nonseparation reasons. These States tested three sampling designs 
and used the BAM case investigation methodology. Although the pilot 
identified significant rates of error in the denial decisions that were 
investigated, national implementation of a program to measure the 
accuracy of denied claims was deferred because of resource constraints 
and other program priorities, such as the implementation of Benefit 
Timeliness and Quality and the Tax Performance System. Since the 1986-
87 denied claims pilot, several groups, including organized labor, 
employee rights legal support groups, the Department of Labor's Office 
of

[[Page 59022]]

Inspector General, and the Vice President's National Performance Review 
have urged the Department to measure the accuracy of decisions that 
deny UC benefit claims.
    In 1995 the Performance Enhancement Work Group (PEWG), which 
consisted of senior SESA managers and Federal staff, recommended 
several changes in the way UC operational performance was measured and 
improved. The Department accepted most of the recommendations and has 
implemented them as UI PERFORMS. UIPL No. 41-95 (August 24, 1995) 
describes in detail the UI PERFORMS performance management system. 
Among the PEWG recommendations with respect to BAM were: (1) The 
implementation of a system to measure the accuracy of decisions to deny 
UC claims; (2) reductions in the BAM paid claims sample allocations; 
and (3) a modification of data collection methods to provide the States 
more flexibility in using program resources, which would be redirected 
to support UI PERFORMS continuous improvement activities, including 
investigating the accuracy of denied claims.
    UIPL No. 15-96 (April 2, 1996) described the proposed changes and 
solicited comments from the SESA's. According to the Attachment to the 
UIPL, ``Measuring UI Benefit Payment Accuracy Under UI PERFORMS: 
Proposed Changes to Benefits QC'':

    Under the proposal, staff freed up because of sample reductions 
or changes in how verifications are conducted will be available for 
investigating denied claims and other UI Performs [sic] activities, 
including taking other performance measurements.

    The implementation of the changes and the reallocation of BAM 
resources were reported in UIPL No. 3-97 (November 20, 1996).
    Because significant time had elapsed since the initial denied 
claims pilot, the Department conducted a new pilot to guide 
implementation of DCA. The principal objectives of the pilot were:
     To test the operational feasibility of applying the BAM 
paid claims investigation methodology to denied UC claims, including 
both intrastate and interstate claims; and
     To evaluate whether the accuracy of decisions to deny UC 
claims for separation or nonseparation eligibility reasons is 
adequately addressed through the quarterly reviews of nonmonetary 
determination quality (ET Handbook 301) or whether the accuracy of 
these nonmonetary determinations can be measured only through the more 
comprehensive BAM fact-finding process.
    Five States (Nebraska, New Jersey, South Carolina, West Virginia, 
and Wisconsin) participated in this new pilot. Sampling and 
investigation of denied UC claims were conducted from September 1997 
through September 1998. A final pilot evaluation report was issued in 
May 1999 and is available on the OWS Web site at: http://workforcesecurity.doleta.gov.
    The five States that participated in the new pilot demonstrated 
that the BAM case investigation methodology was easy to implement for 
both intrastate and interstate claims, was successful in detecting 
erroneously denied claims, and identified valuable information on the 
cause, responsible party, point of detection, and prior agency action 
for improperly denied claims that SESA's could use to improve UC 
operations. The new pilot also demonstrated that the results of the 
quarterly evaluations of nonmonetary determination quality are not a 
reliable predictor of the accuracy of decisions to deny claims for UC. 
Because of the fundamental differences in the methodologies used in BAM 
and the nonmonetary quality review, both programs contribute important 
but distinct information within UI PERFORMS.
    In general, the new pilot confirmed the results of the initial 
pilot that significant percentages of UC claims in all three 
eligibility areas (monetary, separation, and nonseparation) were 
incorrectly denied, although accuracy rates varied both among States 
and among the three eligibility areas. These results are summarized in 
Table 1.

        Table 1.--Percentage of Claims Erroneously Denied by Type of Determination--1997-98 Denials Pilot
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                                                                     Monetary       Separation     Nonseparation
                              State                                   (pct.)          (pct.)          (pct.)
----------------------------------------------------------------------------------------------------------------
Nebraska........................................................     10.1 ( 9.6)      4.0 ( 3.5)     14.0 (13.5)
New Jersey......................................................     12.6 ( 8.2)     11.3 ( 6.2)     14.4 (11.8)
South Carolina..................................................     23.4 (16.2)      5.0 ( 3.0)     18.5 (17.0)
West Virginia...................................................     15.1 (13.5)      3.4 ( 2.9)      6.8 ( 5.8)
Wisconsin.......................................................     18.2 ( 9.4)     19.7 (16.3)     21.7 (16.3)
1997-98 Pilot Average...........................................     16.0 (11.2)      8.7 ( 6.4)     15.0 (12.9)
1986-87 Pilot Average...........................................        23              15              14
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    Note: The first percentage in each column is the unadjusted 
percentage of erroneous denials. The second percentage, in 
parentheses, is adjusted for appeals, redeterminations, and cases 
which the agency was in the process of resolving.

II. Review Focus

    The Department of Labor is particularly interested in comments 
which:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.

III. Current Actions

    The Department of Labor proposes the following methodology and 
operational characteristics of DCA:
    Sample Design and Sample Sizes: Each week, States will select 
systematic random samples from three separate sampling frames 
constructed from the universes of claims for UC for which eligibility 
was denied for monetary, separation, or nonseparation reasons. States 
will use the BAM population edit and sample selection software program, 
which was distributed to all SESA's in January 1998, to select the 
weekly samples. This software uses a systematic random sampling 
algorithm. The

[[Page 59023]]

Department will distribute a table of random start numbers to use with 
the BAM/DCA sample selection program.
    States will sample a minimum of 150 cases of each type of denial in 
each calendar year. Unlike BAM paid claims accuracy, in which the ten 
States with the smallest workloads sample paid claims at the reduced 
level of 360 cases per year, all States are allocated the same number 
of DCA cases. The Department considers the annual sample allocation of 
150 cases for each of the three types of denials to be the minimum 
sample size required to produce DCA rate estimates with acceptable 
precision and to yield a sufficient number of error cases to produce 
program improvement information. The proposed DCA sample allocations 
also take into account the likelihood of DCA claimant response rates 
less than 100 percent. This will result in fewer sample cases than the 
allocated levels that will be available to estimate accuracy rates and 
to provide information on error causes, responsibility, and other 
information that can be used for program improvement.
    Table 2 shows the precision, as measured by 95 percent confidence 
intervals, and the number of sample cases expected to be in error by 
various error rates for the proposed DCA sample size and the current 
BAM paid claims sample allocations.

       Table 2.--95 Percent Confidence Intervals and Expected Number of Error Cases by Annual Sample Size
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                                Denied claims accuracy                 Benefit accuracy measurement
                             -----------------------------------------------------------------------------------
                                      Sample=150                  Sample=360                  Sample=480
       Error rate (%)        -----------------------------------------------------------------------------------
                              95 pct. C.I.    Expected    95 pct. C.I.    Expected    95 pct. C.I.    Expected
                                  (+/-)      error cases      (+/-)      error cases      (+/-)      error cases
--------------------------------------------------*---------------------------*---------------------------*-----
5...........................       3.5            8            2.3           18            2.0           24
10..........................       4.8           15            3.1           36            2.7           48
15..........................       5.7           23            3.7           54            3.2           72
20..........................       6.4           30            4.1           72            3.6           96
25..........................       6.9           38            4.5           90            3.9          120
30..........................       7.3           45            4.7          108            4.1          144
35..........................       7.6           53            4.9          126            4.3          168
40..........................       7.8           60            5.1          144            4.4          192
45..........................       8.0           68            5.1          162            4.5          216
50..........................       8.0           75            5.2          180            4.5         240
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* Rounded to the nearest integer.


    Note: Confidence intervals are expressed as the number of 
percentage points +/- for the estimated error rate. Example: For an 
estimated error rate of 20% and an annual sample size of 150, the 95 
percent confidence interval is 20.0% + 6.4 (13.6%-26.4%).

    The sampling errors in States with relatively small populations of 
denied claims will be slightly lower, due to the higher percentage of 
the population that is sampled.
    Table 3 shows the 95 percent confidence intervals for several error 
rates and sampling fractions, for a sample size of 150 cases. Based on 
CY 1999 data, a sample of 150 denials exceeds 10 percent of the 
population of monetary denials in eight States; and exceeds 10 percent 
of the population of separation denials in one State. Sampling 
fractions for populations of nonseparation denials are less than 10 
percent in all States.

          Table 3.--95 Percent Confidence Intervals By Error Rate and Percentage of Population Sampled
                                             [Sample size=150 cases]
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                                                                    Error rate (percent)
       Percent of population sampled       ---------------------------------------------------------------------
                                                  5            10            15            20            25
----------------------------------------------------------------------------------------------------------------
1.........................................          3.5           4.8           5.7           6.4           6.9
2.........................................          3.5           4.8           5.7           6.3           6.9
3.........................................          3.4           4.7           5.6           6.3           6.8
4.........................................          3.4           4.7           5.6           6.3           6.8
5.........................................          3.4           4.7           5.6           6.2           6.8
10........................................          3.3           4.6           5.4           6.1           6.6
15........................................          3.2           4.4           5.3           5.9           6.4
20........................................          3.1           4.3           5.1           5.7           6.2
25........................................          3.0           4.2           4.9           5.5           6.0
----------------------------------------------------------------------------------------------------------------

    Scope: Denied intrastate and interstate claims in the State UI, 
UCFE, and UCX programs will be included in DCA. In addition, interstate 
claims in the UI, UCFE, and UCX programs will be included in the BAM 
paid claims sampling frames, effective with the implementation of DCA. 
Paid and denied interstate claims will be included in the sampling 
frames of the interstate liable State.
    Operational Definitions of Sampling Frames: Unless otherwise 
stated, definitions refer to those used in ET Handbook 401, 3rd 
edition. ETA report cell references are those used in ET Handbook 402, 
4th edition.
(1) Monetary Denials
    Include all initial claims that meet the definition for inclusion 
in the ETA 5159 Claims and Activities report on lines 101 (State UI), 
102 (UCFE, No UI), and 103 (UCX only), for item 2 (new intrastate, 
excluding transitional), item 6 (transitional), and item 7 (interstate

[[Page 59024]]

received as liable State) and for which eligibility was denied because 
of:
     Insufficient wages,
     Insufficient hours/weeks/days,
     Failure of high quarter wage test,
     Transitional wage requirement, or
     Other State monetary eligibility requirement.
    Exclude denied claims made under the Short Time Compensation (STC) 
(Workshare), Extended Benefits (EB), Trade Readjustment Allowance 
(TRA), Disaster Unemployment Assistance (DUA), or any temporary 
Federal-State supplemental compensation programs.
(2) Separation Denials
    Include all separation determinations that meet the definition for 
inclusion in the ETA 9052 Nonmonetary Determinations Time Lapse 
(Detection Date) report in cells c1 (intrastate), c5 (interstate), and 
c193 (multi-claimant) and for which eligibility was denied based on any 
of the following issues:
     Lack of work (for example, reduction in force, temporary 
lay off),
     Voluntary quit,
     Discharge,
     Labor dispute,
     Military, or
     Job attachment (claimant not separated, including leave of 
absence).
    Exclude denied claims made under the STC, EB, TRA, DUA, or any 
temporary Federal-State supplemental compensation programs.
(3) Nonmonetary-Nonseparation Denials
    Include all nonmonetary-nonseparation determinations that meet the 
definition for inclusion in the ETA 9052 Nonmonetary Determinations 
Time Lapse (Detection Date) report in cells c97 (intrastate), c101 
(interstate), and c193 (multiclaimant) and for which eligibility was 
denied based on any of the following issues:
     Able and/or available to work,
     Actively seeking work,
     Disqualifying/unreported income,
     Refusal of suitable work,
     Failure to apply for or accept referral,
     Failure to report,
     Failure to register with the employment service, or
     Other nonseparation eligibility issue (for example, 
alienstatus, athlete, school employee, seasonality, determination of UI 
status, removal of disqualification).
    Exclude denied claims made under the STC, EB, TRA, DUA, or any 
temporary Federal-State supplemental compensation programs.
    Frequency and Timing: State agencies will create a sampling frame 
file each week. The sampling frame includes all decisions to deny UC 
claims issued during the period 12:00 a.m. Sunday to 11:59 p.m. 
Saturday. The date of the determination is the date that the notice of 
denial is mailed to the claimant, presented to the claimant in-person, 
or otherwise transmitted to the claimant by the State agency. If no 
notice is required, it is the date that the denial action was entered 
into the agency's record system, that a stop payment order was issued, 
or that an offset was applied.
    In the 1997-98 DCA pilot, several claims for UC were sampled which 
were initially denied for insufficient wages but were subsequently 
determined to be monetarily eligible upon the addition of wages from 
out-of-State employers (combined wage claims) or Federal wages (UCFE 
and/or UCX programs). The exchange of information on UCFE and UCX wages 
is in the process of being automated and expedited. However, in order 
to allow time for States to request and receive Federal and combined 
wage credits, the sampling frame for monetary denials will be 
constructed two weeks after the week ending date of the initial claim. 
For example, for all new and transitional initial claims filed during 
the week ending June 10, 2000, the sampling frame will consist of 
claims for which the most recent determination as of June 24 denies 
monetary eligibility.
    Case Investigation: All denied claims sample cases will be 
investigated using the BAM methodology, which is documented in ET 
Handbook 395. Investigators will review agency records and contact the 
claimant, employer(s), and all other relevant parties to verify 
information in agency records or obtain additional information 
pertinent to the decision to deny eligibility. Unlike the investigation 
of paid claims, in which all decisions affecting claimant eligibility 
that precede the compensated week selected for the sample are 
evaluated, the investigation of denied claims will be limited to the 
issue, or issues, upon which the denial decision was based. For 
example, if a continued week claim is denied because the agency 
determined the claimant was not available for work, then only the 
availability issue will be investigated; the monetary, separation and 
any prior nonmonetary determinations will not be investigated. Like the 
investigation of paid claims, States have the flexibility to conduct 
the investigation of denied claims for UC by in-person interview, 
telephone, mail or fax, as they deem appropriate.
    Resources: When BAM paid claims sample sizes were reduced in 
accordance with PEWG recommendations to the 480/360 levels in 1996 in 
preparation for DCA, State staff allocations were adjusted to provide 
sufficient resources to conduct BAM paid and denied claims accuracy, 
Benefit Timeliness and Quality, Tax Performance System, and UI PERFORMS 
continuous improvement activities. Two full-time equivalent (FTE) staff 
positions allocated to continuous improvement activities will support 
DCA. States will decide how to allocate/apportion among staff BAM paid 
and denied claims sample cases.
    ADP Support: UIPL No. 1-98 (October 20, 1997) included the 
documentation for the revised BAM population edit and sample selection 
program, which was distributed to all SESA's in January 1998, and the 
specifications for programming required to construct the DCA sampling 
frame files, for which the SESA's are responsible. DCA applications 
software, which was developed for the DCA pilot, are installed on the 
State Sun Ultra 10 computers provided by the Department. Although this 
software is functional and can be used to conduct DCA, several 
modifications of and additions to this software have been identified 
and will be released to the States in advance of the national 
implementation of DCA. In addition, the BAM sample selection program 
will be modified to include paid interstate claims in the BAM samples 
and to reflect revisions that were identified in the DCA pilot, such as 
the two-week lag in sampling monetary denials. States will have to 
recompile the revised COBOL program on their ADP system.
    Data Recording and Reports: States will record the results of their 
investigations using a standard data collection instrument and suite of 
software supplied by the Department. The Department will collect this 
information from the State databases, store the data in a database in 
the National Office in Washington, D.C., and produce annual statistics 
on the accuracy rates for each of the three types of denied claims by 
State.
    Training: The Department will conduct DCA training for State staff 
during the calendar quarter preceding national implementation. The 
Department will issue a directive containing details on the times, 
locations, and content of the training in advance of the sessions.
    Type of Review: New.
    Agency: Employment and Training Administration.
    Title: Unemployment Compensation Denied Claims Accuracy.

[[Page 59025]]

    Record keeping: States are required to follow their State laws 
regarding public record retention in retaining BAM paid and denied 
claims records.
    Affected Public: Individuals; Businesses; Other for-profit/not-for-
profit organizations; Farms; Federal, State, Local, and Tribal 
Governmental entities.
    Frequency: Weekly.
    Total Respondents: 1,395 per week (includes claimants, employers, 
third parties, and SESA BAM/DCA staff).
    Total Responses: 72,540 per year (52 State Agencies/1,395 per 
State; includes claimants, employers, third parties, and SESA DCA 
staff).
    Estimated Time Per Response: Claimant--0.5 hours; Employers and 
Third Parties--0.5 hours; SESA BAM/DCA staff--6.67 hours.
    Total Burden Hours: 180,375 hours.
    Total Burden Cost (capital/startup): $1,014,000 (52 State Agencies/
$19,500 per State).
    Total Burden Cost (operating/maintaining): $4,264,000 (annual) 
(approximately $82,000 per State).
    Comments submitted in response to this request will be summarized 
and/or included in the request for OMB approval of the information 
collection request; they will also become a matter of public record.

    Signed in Washington, D.C., on September 26, 2000.
Grace A. Kilbane,
Administrator, Office of Workforce Security.
[FR Doc. 00-25354 Filed 10-2-00; 8:45 am]
BILLING CODE 4510-30-U