States Demand Refunds For Unemployment Money Paid In Error | New Hampshire Public Radio

States Demand Refunds For Unemployment Money Paid In Error

Nov 4, 2020
Originally published on November 5, 2020 11:24 am

For months, Stephen Ordway had March 13 circled on his calendar.

That was opening day for Dos Mexican Eats, his new restaurant in Dover, N.H.

Then eight short days after selling his first burrito, the pandemic forced Ordway to close down.

"It was terrible," Ordway said. "That's an understatement."

Like millions of Americans who lost their source of income due to COVID-19, Ordway filed for unemployment benefits this year. The payments — roughly $750 a week — served as a financial lifeline for the new business owner.

Then came the hook: In late July, he received an overpayment demand letter from the New Hampshire Employment Security office. The notice said he wasn't entitled to benefits after all because the agency determined he left his previous restaurant job for personal reasons.

The state wanted him to return nearly $12,000.

"It was just — [my] jaw dropped," he said of seeing the notice. "Literally, I think my mouth opened up pretty wide. My eyes got a little watery. I might have made a shrieking sound."

In New Hampshire, more than 10,000 people who collected unemployment during the pandemic have received similar notices. Colorado, Pennsylvania and Ohio have also begun sending out overpayment letters, according to The Wall Street Journal.

Unemployment benefit overpayments happen for a variety of reasons. People may apply for programs they believe they are qualified for but later are ruled ineligible, or applicants make good-faith mistakes filling out the complicated forms.

"Maybe they don't have the specific earnings statements they need at the time, or maybe they're limited English proficient, and they are trying to navigate an online application that is in English," said Ray Burke, a lawyer with New Hampshire Legal Assistance.

State unemployment offices are under the gun to process applications quickly, never more so than during the pandemic.

"And so we don't want to allow the desire to have perfect paperwork or a seemingly endless fact finding process get in the way of getting money out the door," said Richard Lavers, deputy commissioner for New Hampshire's Employment Security agency.

Weeks or sometimes months later, new information may reach the state offices, such as updated payment histories, or a discrepancy from a former employer, which can lead to an overpayment notice.

In normal economic times, overpayments were common, occurring in approximately 10% of all cases nationally. Now, states are trying to process a record wave of applicants and navigate several new programs launched during the pandemic.

In short, a complex system turned more complex.

"Naturally, there are going to be mistakes made," said Michele Evermore with the National Employment Law Project. "States are basically building the plane as they are flying it."

According to Evermore, some states are still so backlogged with applications that they haven't even begun reviewing for overpayments. It's not clear how many of the more than 30 million Americans who received benefits this year may be affected.

In most states, anyone who receives an overpayment notice can file an appeal. If it's ruled that the applicant did in fact make an honest mistake, or that the person was qualified all along, the debt can be waived. However, the federal Pandemic Unemployment Assistance program, or PUA, currently does not allow waivers.

After filing his appeal, Ordway was able to prove that he was working at his new restaurant when the pandemic struck and therefore was entitled to benefits when it was forced to close. He wasn't required to refund any of the money.

"It wasn't just like a paid vacation or something like that," said Ordway, who is now working full time at his restaurant. "These were basic needs that were being met by these payments coming in every week."

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MARY LOUISE KELLY, HOST:

Unemployment benefits have become a lifeline for millions of workers impacted by COVID-19. Now some recipients of benefits are receiving notices that they were overpaid and may need to return some or all of the money. New Hampshire Public Radio's Todd Bookman reports.

TODD BOOKMAN, BYLINE: For months, Stephen Ordway had March 13 circled on his calendar. It was the day he and two partners opened a Mexican restaurant in Dover, N.H. And then eight days after selling his first burrito, the pandemic forced Ordway to close down.

STEPHEN ORDWAY: It was terrible. That's an understatement.

BOOKMAN: Ordway's restaurant, Dos Mexican Eats, shut down for about six weeks. Then it reopened with limited hours. During that time, Ordway filed for and collected unemployment benefits.

ORDWAY: It wasn't just like a paid vacation or something like that. These were basic needs that were being met by these payments coming in every week.

BOOKMAN: Rent, food, college loans - the money made a difference. Then in July, after he was back working full time, he got what's called an overpayment demand letter. The state's unemployment office determined that he wasn't entitled to benefits after all. It claimed he left his previous restaurant job for personal reasons. The state wanted back $12,000.

ORDWAY: I mean, it's just - jaw dropped, literally. I think my mouth opened up pretty wide. My eyes got a little watery. I might have made kind of a shrieking sound. I'm not sure.

BOOKMAN: In New Hampshire alone, 10,000 people who collected unemployment during the pandemic have received similar notices. Colorado, Pennsylvania, Ohio - they've also begun sending out overpayment letters. Ray Burke is a legal aid attorney in New Hampshire. He says overpayments happen for a variety of reasons. Sometimes people apply for programs that they think they're eligible for but aren't, or they make honest mistakes filling out the complicated forms.

RAY BURKE: Maybe they don't have the specific earning statements they need at the time, or maybe they're limited English-proficient and they're trying to navigate an online application that's in English.

BOOKMAN: And state unemployment offices are under the gun to process applications quickly. Rich Lavers with New Hampshire Employment Security says the goal is to keep the system moving, especially during a pandemic and recession.

RICH LAVERS: And so we don't want to allow the desire to have perfect paperwork or a seemingly endless fact-finding process get in the way of getting money out the door.

BOOKMAN: So states approve benefits. But then weeks or months later, new information may come in - updated payment histories or a discrepancy from a former employer. In normal economic times, overpayments were a fairly common occurrence. Now states are trying to process a huge wave of applicants. There were also new programs launched during the pandemic to reach more people. In short, a complex system got more complex.

MICHELE EVERMORE: And naturally, there are going to be mistakes made. I mean, states are basically building the plane as they're flying it.

BOOKMAN: This is Michele Evermore with the National Employment Law Project. She says some states are still so backlogged with applications that they haven't even begun reviewing for overpayments. It's not clear how many of the more than 30 million Americans who received benefits this year may be impacted. In most states, you can appeal an overpayment. And if it's ruled that the applicant did, in fact, make an honest mistake or that person was qualified all along, the debt can be waived. That's what happened with Stephen Ordway. He was able to prove that his new restaurant had already opened when the pandemic struck.

ORDWAY: Unemployment plays a pivotal role in people's lives right now. And the last thing that you want to do to an individual that's - that needs that money is to strip it all away.

BOOKMAN: With his appeal done, he's back focused on his new restaurant.

For NPR News, I'm Todd Bookman.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.