Baker administration loses bid to waive $2 billion in overpaid federal unemployment claims

On Friday, a Labor Department official told the Globe that federal law prohibits the sweeping waiver requested by Massachusetts. But the official, Michele Evermore, deputy director of policy at the Office of Unemployment Insurance Modernization, said in an interview that the state can forgive one category of overpayments: PUA recipients who don’t have did not respond to requests for proof of previous employment.

Failure to provide a work history — a requirement set by Congress after the PUA program ran smoothly — was the most common reason Massachusetts job seekers were retroactively declared ineligible for federal benefits, according to the DUA.

The waiver, however, will be limited to PUA payments made before March 23, 2021. This is when the state informed recipients that they must show proof of their work history; subsequent benefits can still be withdrawn, but only after the DUA has considered each case individually.

Evermore acknowledged that figuring out which overpayments can be disallowed and which cannot will be a complicated task.

Meanwhile, the DUA will also have to navigate a mountain of waiver requests for all other federal overpayments, while seeking to resolve approximately $375 million in state-funded benefit overpayments. The DUA said earlier this year it had dropped on appeal or waived $1.8 billion in overpayments using its current procedures.

While the DUA administered the pandemic programs, the money was provided by Congress. Overpayments on state-funded unemployment claims were not part of the state’s request, which was filed with the Labor Department in February.

Massachusetts’ request for forgiveness for all non-fraudulent overpayments was a long-running request, but Gov. Charlie Baker had said he hoped a deal could be reached with the Labor Department, headed by the former Boston Mayor Marty Walsh.

But Congress limits Walsh’s generosity. States are allowed to grant blanket overpayment waivers under two conditions: the recipient is not at fault and forcing repayment would go against what is known as “fairness and good conscience.” The trick is to determine when reimbursement would violate the spongy concept of fairness and good conscience.

The Labor Department determined that PUA recipients were not responsible for benefits paid before the DUA sent requests for records of employment, and demanding reimbursement would not be fair, Evermore said.

“These people didn’t know they were going to have to justify their jobs,” she said.

But for benefits paid after notification, Evermore said, “it was just hard to plead someone who didn’t respond . . . No fault is a strict standard.”

The Baker administration said it appreciated the “initial relief” provided by the Labor Department. The state is “reviewing the decision and will soon have more to say about plans to provide new opportunities for assistance to claimants with overpayment issues,” a spokesperson for the Executive Office of Labor and Development said. of the work force.

Overpayment notifications spiked after Congress passed new unemployment relief legislation in December 2020. The bill would require state employment agencies like the DUA to Obtain documented proof of prior employment of PUA recipients. Initially, these individuals could self-certify their eligibility. PUA was created for self-employed and construction workers who are not covered by state unemployment.

The rule change piled more work on an already overloaded DUA.

More than 350,000 people received $2.33 billion in overpayment notices, the DUA said in a report to the Legislature last month.

Many of them had returned to work and were no longer checking their DUA accounts for emails, the Globe reported. The opinions were confusing at times, especially for people with limited English skills, and DUA duty officers were often impossible to reach. Many people had long since spent the money the state now said they owed.

More than three-quarters of overpayments are related to federal benefits, including the PUA. The state had 29,000 pending waiver requests, including 13,700 related to federal benefits.

According to its report, about 55,400 people with state benefit overpayments and 7,800 PUA claimants have either fully or partially repaid DUA or are on a repayment plan. The recoveries total $183 million on federal benefits and $39 million on state unemployment.

Jon Chesto of Globe staff contributed to this report.

Larry Edelman can be contacted at Follow him on Twitter @GlobeNewsEd.

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