States Overpaid COVID Claims, Now They Want The Money Back

Authored by Mike Shedlock via MishTalk,

A rush to get out checks resulted in claims being paid that shouldn’t have been paid.

Oops Money Already Spent

Please consider States Overpaid Coronavirus Unemployment Claims

Cher Haavind, deputy executive director of the Colorado Department of Labor and Employment, says many overpayments stemmed from workers incorrectly reporting their earnings.

States can waive recovery of overpayments for most unemployment insurance when there is no fraud involved, but the Pandemic Unemployment Assistance program follows a different set of rules. It is administered as a form of disaster relief, and the statute that guides it blocks states from forgiving the debts.

Adding to the complexity, the PUA program gave new categories of workers—including gig workers and the self-employed—access to unemployment checks. But state unemployment systems were designed to calculate benefits based on traditional jobs, employer records, W-2 tax documents and verifying income with pay stubs. Re-engineering the systems to account for far more complicated self-employment income was bound to create problems, experts say.

In Ohio, thousands of workers have been overpaid through the regular unemployment-benefits system and Pandemic Unemployment Assistance, says Michelle Wrona Fox, a staff attorney at Community Legal Aid Services in Youngstown, Ohio. For some of Ms. Fox’s clients, the state is docking their remaining benefits by half to recoup its money.

“I’m seeing complete panic,” she says. Many of Ms. Fox’s clients waited two to three months to get benefits in the first place, she says, and some are facing eviction. “They’re in dire straits,” she adds.

A spokesman for Ohio’s Department of Job and Family Services says about 20% of PUA claimants, or 108,000 people, had been overpaid as of Aug. 31 because of a combination of errors by the agency and claimants, but adds most of the errors arose from individuals failing to claim income they earned in weeks when they also received benefits.

Tip of the Iceberg

The article highlights errors in Pennsylvania, Ohio, and Colorado.

Some received $10,000 or more too much. One person was overpaid  overpaid by $13,969.

Three states is likely the tip of the iceberg.

Fraud?

I suspect so. Individuals failed to claim income they earned in weeks when they also received benefits.

The less money you reported, the higher the benefits you received. 

Some of this was accidental. But how much was purposeful?

Checks Stopped

Meanwhile the checks stopped on September 5. That’s when the PUA benefits expired. 

For discussion, please see Little Progress on Unemployment Claims but Checks Grind to a Halt.

It is not possible to lower payments to make up the difference, yet the money has been spent.