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State to thousands who got unemployment money: Give it back

Kristina Nigro spent the past year and a half like many Connecticut residents: out of work.

As the coronavirus pandemic set in, Nigro was furloughed from her job as a dog trainer, a position that required her to travel throughout the state and enter several people's homes each day. And that temporary leave later became permanent, she said.

Amid a global pandemic and economic crisis, Nigro did what millions of Americans were forced to do. She submitted an unemployment claim and waited anxiously to hear if she'd receive jobless benefits to help cover her rent, utilities, groceries, car insurance and other living expenses.

The Connecticut Department of Labor eventually ruled that Nigro was eligible, and the weekly payments began arriving in her account. That money was the only thing that kept Nigro afloat as the deadly pandemic stretched on and her attempts to find a new job repeatedly fell flat.

But all of that changed earlier in March when Nigro received an alarming letter at her small East Haven apartment. State officials, she was told, had reexamined her case and determined that she was not qualified for the unemployment assistance she'd been collecting and spending for nearly a year.

As a result, the state was ordering her to repay $31,110 in benefits.

After reading the letter, Nigro broke into tears. She didn't understand: What prompted the state to reverse its decision? Why would she be allowed to receive benefits for months and suddenly be ruled ineligible? How did the state expect her to repay the money when she'd been out of work for months?

Nigro, who was also burying her father around the same time, said she felt like she was being kicked while she was down. She felt helpless and completely alone.

But as it turns out, Nigro's experience is not uncommon in Connecticut at the moment.

State officials are in the process of reviewing and auditing a large number of the unemployment claims they approved over the past year, and they've begun to issue thousands of letters instructing people to repay part or all of the benefits they received during the pandemic.

Juliet Manalan, a spokeswoman for the state Department of Labor, said the agency has dealt with nearly 30,000 overpayment cases over the past year.

In all, the state reported to the federal government that it identified more than $8.6 million tied to overpayments between April and June of this year. That's a huge uptick from the previous six years, when the state reported, on average, around $3 million in overpayments each quarter.

But retrieving all of that money won't be easy. Getting people who are already cash-strapped to come up with tens of thousands of dollars is likely to be a very difficult task — and one that could threaten to push vulnerable people even further into the margins.

Some of the overpayments the state is seeking to collect have been attributed to fraud. But in many cases, they stem from unintentional mistakes on the part of the applicant or the state unemployment agency itself.

In other instances, people are notified about an overpayment as a result of their former employer appealing and overturning the initial decision to grant them benefits.

What seemed like a lifeline can quickly turn into an anchor.

Even before the pandemic struck, when the state was dealing with far fewer unemployment claims, it was common for the state to spot alleged overpayments. It's a normal part of the system.

The problem is worse right now, however, because of the more than half a million jobless claims the state approved over the past year and a half, and the more than $9.7 billion it shelled out since the beginning of the pandemic.

Attorneys who represent people dealing with Connecticut's unemployment system were not surprised by the large number of people now being pursued for overpayments or the massive amounts of money some of them are being asked to return.

The growing number of overpayments now being documented by the state, they argue, can likely be attributed to the same problems that forced applicants to wait weeks or months to finalize their unemployment claims last year.

The Department of Labor didn't have enough people to manage the hundreds of thousands of workers who were laid off en masse last year, they said. The computer programs it used were antiquated, at best. Many of the people submitting applications were unfamiliar with the system and filing for unemployment for the very first time. And then there was the added complication of rolling out several brand new federal unemployment programs.

Peter Goselin, who has worked as a labor and employment attorney for nearly 26 years, said the system was so overburdened and complicated that it became nearly impossible for people to know if they were filling out their applications correctly.

"If people can't get answers to their questions, of course they are going to make mistakes when they file," he said. "I'm a lawyer, and it was incredibly confusing to me. I can't imagine how a fast-food worker with a high school education is supposed to navigate a system like that. It doesn't make any sense at all."

Since the beginning of the year, Goselin said, he's fielded a growing number of calls and emails from people seeking advice on alleged overpayments.

The state did not accuse people of fraud in those cases, he said. The workers filled out their applications truthfully and honestly. But, like Nigro, many are now facing a potential repayment of large sums of money.

"There is an awful lot of folks who lost jobs and have been without employment for the past year," Goselin said, "and they are being told they need to cough up thousands of dollars."

Many government officials, Goselin pointed out, credited the unemployment system and the additional federal assistance given out during the pandemic with propping up the economy in Connecticut over the past year.  But for those facing the repayment of thousands of dollars, he said, that system could now be their demise.

Another issue that is likely contributing to the ballooning amount of overpayments being reported in Connecticut is the unprecedented amount of time it's taking for the state to rule on thousands of unemployment appeals.

Those appeals are handled in a separate administrative court system. There are no juries or high-profile trials. The cases play out behind the scenes in private hearings.

Every state has a similar system. It allows workers and their former employers to challenge the state's decisions to award or deny unemployment benefits.

In normal times, Connecticut officials issue rulings on the vast majority of appeals in less than a month and a half. But that changed during the pandemic, as thousands of new cases flooded in and officials struggled to clear the backlog.

By the beginning of this year, 35% of the unemployment cases in the first stage of an appeal had been waiting for more than half a year for a decision.

In response, the state announced this March that it hired nearly a dozen additional so-called referees to review the appeals and issue decisions. But the problem has only gotten worse since then, according to federal data.

At the end of July, there were a record-breaking 11,000 initial appeals awaiting a ruling in Connecticut, and roughly 740 of those cases had been stalled for more than a year.

That can be a serious problem for people who are initially approved for unemployment aid but later have those benefits overturned. The longer an appeal stretches on, the more money people are allowed to collect and the larger the potential debt grows.

The online library where the state posts recent appeal decisions includes a growing list of examples where people were informed they were ineligible for state benefits more than a year after they began collecting money.

Take the example of one Connecticut woman who worked at a McDonald's prior to the pandemic. According to the summary of her case, the state granted her benefits on April 5, 2020, following the closure of schools and many businesses.

Her employer quickly learned about the claim and filed an appeal contesting her eligibility less than a month later.

Yet for more than a year, that appeal sat idle as the woman collected and spent thousands of dollars to support herself and her family. Finally, on April 21, the state reversed its decision and ruled that she should not have been eligible for the state unemployment aid she received.

The woman tried to explain that she couldn't return to work because she needed to take care of her 8-year-old daughter, who was out of school and learning remotely. But it was no use.

The state's appeals board upheld the decision. While they rejected her pleas, they did offer her a slight reprieve.

Because of the "unreasonable" amount of time it took for the state to consider her case, the state, they said, would only seek to recollect the first four months of benefits she received.

There are other opportunities for people to apply for forgiveness when faced with an overpayment of unemployment benefits in Connecticut, as long as they aren't directly accused of fraud.

The state, for instance, allows people to apply for a waiver if the overpayment was the result of a "gross administrative errors" or if the person's chances of finding a new job are limited by a physical or mental disability.

People can also qualify if they or their family earn less than 150% of the federal poverty level, which comes out to roughly $19,320 annually for an individual and $39,750 per year for a family of four.

Some people sought out that help in recent months. Between April and June of this year, the state granted more than $1.2 million in waivers in cases where they believed it would not be in "good conscience" to collect on the debts.

But not everyone will be granted that relief, and the waivers aren't automatic. It's usually up to the unemployed workers to figure it out for themselves.

That's a concern when some of the people who face alleged overpayments or reversals in claims have already struggled to navigate the system. Not everyone finds a lawyer to represent them. And most people have no idea what to do when they receive a letter informing them they owe thousands of dollars to the unemployment system, said Nadine Nevins, an attorney with Connecticut Legal Services.

"They are petrified because there's this huge debt, and many of these people still don't have work," said Nevins, who has worked with unemployment cases for more than two decades.

Nevins recounted a client she met with recently who was notified by the state about an alleged overpayment on her unemployment account. The woman is also facing a potential eviction from her apartment, where she cared for her developmentally disabled child during the pandemic.

Cases like that have Nevins worried that the state's attempts to recover overpayments of unemployment benefits could compound other problems in the state, like evictions. So far, the state has been rather openhanded with people who have applied for waivers, at least in Nevins' experience.

But for anyone who doesn't have their overpayment waived, the result can be severe. The state can choose to garnish people's wages or seize their tax refunds in order to collect on the debts.

Nigro, the East Haven resident, is one of the many people who are now hoping to avoid that outcome. She filed an appeal earlier this year in a last-ditch attempt to avoid the $31,110 the state claims she owes. But she's yet to hear back about that request.

In the meantime, she's tried to focus on restarting her life. She was recently hired at a new job at an after-school program working with children.

"I just want this chapter closed," she said.

 

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