The state appears to be softening its stance on clawing back money from hundreds of thousands of residents who received higher unemployment benefits than they were entitled to during the pandemic.
Governor Charlie Baker, in an interview Thursday on GBH “Boston Public Radio,” said the state wants to help people work through the process of appealing or waiving overpayment demands. He also disclosed his administration is discussing with members of Congress ways to provide relief from the unexpected debt.
“This is not the way this is supposed to work. People participated in this program based on a set of rules that changed,” Baker acknowledged.
He was referring to the Pandemic Unemployment Assistance, a federally funded program that provided jobless benefits to independent contractors, gig workers, and others who didn’t qualify for state unemployment pay when they lost their jobs during the pandemic.
After a hurried launch here in April 2020, the US Labor Department tightened up PUA rules. That resulted in many recipients being told retroactively that they were ineligible or had been paid too much, and would have to return the money, even if the state was responsible for the mistake.
The Massachusetts agency, which also administers federal jobless benefits in the state, has said it paid $33 billion in jobless aid to almost 4 million claimants in 2020 and 2021. By the department’s tally, there are about 383,000 people with potential overpayments of $2.6 billion, the large majority of that from PUA and other federal programs. Total overpayments, including those already resolved, likely far exceed that amount.
Overpayments of unemployment benefits are not unheard of, and the DUA has a process for people to appeal its determination or apply for a waiver, such as by citing financial hardship. The department says it has dropped or waived $1.8 billion in overpayments since the pandemic hit.
Given the size of the pandemic benefits program and the ever-changing rules, massive overpayments occurred in unemployment programs all across the country. The federal Labor Department requires states to recoup federal money, even if the claimants were not at fault.
Some are calling on Congress to waive nonfraudulent unemployment overpayments made during the pandemic. They say people who were out of work spent the money on basic necessities, such as food and rent, and the process to recover the funds has not only been stressful for individuals but also onerous for state governments.
In a letter to congressional leaders sent in early January, the National Association of State Workforce Agencies called on the federal government to allow states to waive nonfraudulent overpayments because collecting the money would pose economic hardship on individuals who already lost part of their income during the pandemic.
“The likelihood of recovering these funds is low and the cost of states’ efforts to secure repayment far outweighs any monetary returns,” according to the letter.
Representative Richard Neal, the Springfield Democrat who chairs the powerful House Ways and Means Committee, was among those who received the association’s letter.
“Chairman Neal is aware of this issue and has directed committee staff to begin working with members from the affected states on the best pathway forward,” according to a committee spokesperson.
During his radio interview Thursday, Baker confirmed the state is in talks with federal officials.
“There have been conversations with Congress, not just in Massachusetts but from all over the place,” he said.
The Globe first reported last week about the state’s effort to claw back billions of dollars in overpayments. Filings with the US Labor Department show a tally of more than 719,000 overpaid claims in Massachusetts not involving fraud from the beginning of 2020 through September 2021. An individual may have multiple claims, and many cases have been resolved.
Baker has disputed the characterization in Globe stories that the DUA has clawed back money, saying that term only applies when the state unilaterally takes money from an individual’s tax refund.
However, claimants and their lawyers describe a process that has been confusing and frightening for many who were told they owe thousands of dollars. Copies of “tax refund intercept” notices the DUA sent claimants last year reviewed by the Globe warn them the state could deduct money from their tax refunds.
The DUA confirmed that some claimants received notices, but since March 2020 the state has stopped its normal practice of seizing tax refund funds to address nonfraudulent overpayments. Instead, the DUA has been offering people installment plans or offsetting future benefits should a claimant become unemployed again.
On GBH, Baker once again maintained the state isn’t taking an aggressive approach to get money returned.
“We’re not going to chase people on this stuff,” he said.
Some Democratic gubernatorial candidates, including state Senator Sonia Chang-Díaz and Harvard professor Danielle Allen, are calling for a moratorium on overpayment collections. Meanwhile, Representative Joan Meschino, a Democrat from Hull, has sponsored legislation that seeks to clarify and expand the criteria for waiving overpayments for people who didn’t commit fraud. About 39,000 waiver requests have been filed, the state has said.
And on Wednesday, the Massachusetts Senate passed a $76 million COVID-19 package that includes money for the DUA to conduct a multilingual public information campaign to notify claimants of their legal rights. The bill also extends the period during which the department can consider a claimant’s appeal.
Some business leaders and gubernatorial candidates have proposed using federal relief money or state surplus funds to reduce or forgive the overpayments. Baker, however, urged people who have received demand letters to work through the current process and provide additional information that might resolve their cases.
“If we don’t do it this way,” he said, “then Massachusetts is gonna write a very big check to the federal government.”