April 21, 2022

Massachusetts plans relief on $1.6 billion in unemployment insurance overpayments

BY Larry EdelmanThe Boston Globe

Governor Charlie Baker’s administration said it would waive unemployment insurance repayments for about 133,000 people in Massachusetts, and make it easier for another 154,000 to apply for waivers.

The Baker administration on Thursday laid out its most comprehensive effort yet to provide full or partial financial relief to nearly 288,000 people who received jobless benefits during the pandemic but were later told they may have to pay back the money.

The state is aiming to end a financial nightmare for claimants facing $2.3 billion in repayment demands — money that many already spent on food, rent, and other basics. The plan will cover up to about 70 percent of those overpaid claims, or $1.6 billion. That’s because not everyone will qualify for a reprieve — or have all amounts forgiven — even as the state expands the eligibility criteria.

The announcement came nearly two weeks after the US Labor Department denied Governor Charlie Baker’s request for permission to waive en masse all federal overpayments. Those benefits, including federal Pandemic Unemployment Assistance, account for most of the outstanding cases, with the rest tied to the state benefits.

Instead, the Labor Department OK’d a blanket waiver for just one small group of claimants who were overpaid, and only for some amounts.

“This has the potential to provide relief to many,” said Rory MacAneney, an employment attorney at Community Legal Aid in Fitchburg. “While it is a welcome development, the fact remains that very few claimants have actually applied for waivers — simply because they don’t know what a waiver is, that it’s available, or how to apply.”

The Department of Unemployment Assistance was hit by a flood of jobless claims starting in March 2020. While overwhelmed, it eventually sent out more than $33 billion in benefit checks to 4 million people over two years.

But more than $4 billion in claims were subsequently flagged for potential errors. After the Globe detailed the overpayment issue in January, the Legislature and advocates put increasing pressure on the administration to come up with a solution for benefit recipients who didn’t commit fraud but were later deemed ineligible or received more money than they were due.

The administration’s plan has three components.

First, the state will write off $475 million in state and federal benefits on 133,000 claims designated as overpaid due to the lack of identity verification.

“A significant portion of these overpayments are uncollectible, as they are likely connected to a nationwide fraud scheme involving stolen identities,” the Executive Office of Labor and Workplace Development said in a statement. It said affected claimants never actually received benefits, which instead went to scammers.

Second, the state disclosed Thursday that more than 53,000 people would be eligible for partial relief under the blanket waiver approved by the Labor Department. It covers $349 million in PUA overpayments triggered by recipients’ failure to provide work histories.

Proof of employment was a requirement Congress set after the PUA program was well underway, and the lack of such documentation was the most common reason unemployment claimants in Massachusetts were retroactively ruled ineligible for federal help.

The blanket forgiveness will be limited to PUA payments made before March 23, 2021, when the state told recipients that they must substantiate their work history. Subsequent benefits can still be waived, but only after the DUA takes a look at each case individually. The agency will return any previously repaid funds to claimants.

Third, the DUA will soon file emergency regulations to expand criteria for waivers to cover as much as $782 million in overpayments to for 154,000 claimants not eligible under the Labor Department’s decision. The state didn’t list the new criteria, but it said they will “broaden the universe of people who qualify” for waivers on federal and statement overpayments.

The administration said it will ask the Legislature for money to offset repayments that are forgiven under the write-off or expanded waiver criteria.

The blanket waiver the administration sought from the federal government would have eliminated the need to go through tens of thousands of waiver requests one by one. Since the start of the pandemic the DUA has waived $2 billion in overpayments on 224,000 claims.

Now the DUA is working on a “one-click” system the state said would simplify and accelerate the process of granting waivers.

MacAneney, the employment attorney, said that the number of Massachusetts residents who will get financial relief will hinge on the state being able to reach out to and process requests from those without legal counsel or with limited English proficiency.

“The real impact of these changes will depend on whether and how DUA incorporates experts in language access, inclusive design, and user experience, in developing and monitoring any new systems, processes, and communications,” she said.

Larry Edelman can be reached at larry.edelman@globe.com. Follow him on Twitter @GlobeNewsEd.