Thousands of Mainers told to repay pandemic-related jobless benefits

Just like tens of thousands of other Mainers, Joseph Parker collected jobless benefits in 2020 as society grappled with an unprecedented public health emergency and economic disaster.

Parker, a then-sidelined contract worker on a lobster boat, gratefully received benefits through an emergency federal program for workers who didn’t qualify for state unemployment insurance. The checks continued for about six months before Parker was able to return to work, and he said he hasn’t filed a claim since.

Then he was caught up in the state’s attempt to recoup $46 million from 11,000 Mainers it says were overpaid federal unemployment benefits distributed during the pandemic.

A few weeks ago, a strange letter from Maine Department of Labor showed up at his house, saying Parker needed to repay $12,744 in overpaid unemployment benefits. A final decision in his case was made in September, it said, and his right to appeal had expired. The letter included a proposed repayment plan, including options to pay installments with a credit card. The letter was dated Oct. 4.

The overpayment notice was so unexpected, Parker thought it could be a scam.

“It looks exactly like the correspondence should look, but it’s just odd. It’s really fishy to me,” he said.

Parker said he wasn’t notified about a potential overpayment by the labor department or given a chance to appeal the case. His attempts to contact the department were unsuccessful.

“I called and called and called and left voicemails and no one has called me back. I didn’t even have a chance to represent myself or anything like that.” he said. “I’m honestly just a hardworking man who was really grateful to get unemployment.”

Days after the Press Herald asked the labor department for information about Parker’s case, the issue was cleared up, he said. The department would not confirm the account without Parker signing a confidentiality waiver.

“It was a clerical error, on both of our behalf,” Parker said.

The department official who called Parker was cordial and helpful but also confused, he said. If Parker’s case was an example of miscommunication or a misunderstanding, he wonders how many others might be dealing with the same problem.

“There might be thousands of Mainers who are in the same boat,” he said.

FAILURE TO RESPOND

Parker is one of tens of thousands of Mainers who collected jobless aid through Pandemic Unemployment Assistance, or PUA, a program established and funded by Congress in the early days of the pandemic to cover contract workers, the self-employed, freelancers and others ineligible for traditional state benefits.

When Congress renewed the program in late 2020, it added a new rule. Starting in 2021, anyone claiming PUA benefits had to provide proof of identity and employment verification such as tax documents, business licenses or receipts. Between the start of 2021 and the program’s expiration that year, nearly 30,000 Maine residents collected PUA benefits worth more than $90 million.

Most people, about 19,000, provided sufficient documentation to prove their eligibility for the program, according to the state labor department. Another 1,000 applicants provided documents that were insufficient.

But a third of claimants – about 10,000 – never replied to requests for identification or income verification or never uploaded documents into the state’s online system, according to the department. Those people now owe millions of dollars to the federal government in overpaid unemployment. For most, a 15-day appeals window expired months ago, although 860 appeals are still pending. Depending on the type of overpayment, the labor department can intercept state or federal tax returns to repay the debt.

The labor department can’t fully explain why so many people never responded to its requests for income and identity verification. However, communications director Jessica Picard stressed that repayment notices are not being sent to claimants mistakenly.

“Multiple notices were sent out by mail and email to individuals that received PUA benefits to notify them of the requirement and outlined the consequences for failing to respond,” Picard said.

Some of the claimants may have been victims of identity theft and had their personal information used to fraudulently apply for PUA benefits, Picard added. But other cases could be more mundane.

“Maine’s experience with non-responses for proof of employment is very similar to that of states across the country,” Picard said. “It could also be claimants who changed their address without telling us, think our notices no longer apply if they have stopped filing, or are simply unable to produce evidence of employment attachment that would have made them eligible for PUA benefits,” Picard said.

Even though overpayment determinations are officially final, the department may still reconsider and waive the overpayment if people submit valid documentation of proof of employment, Picard added.

That means the full amount of overpaid unemployment aid could fluctuate.

“Overall, about $46 million is potentially owed in overpayments due to not providing proof of employment, however this number changes as claims go through multi-level appeal processes,” Picard said.

DELAYED HARDSHIP

The state started asking for identity and income verification from people collecting PUA checks through 2020 and 2021 last May.

The process was criticized for poor communication and technical issues. Some found uploading necessary documents finicky and challenging, especially if they used a smartphones instead of a computer. Even though the department said it made multiple attempts to contact people, some were apparently never made aware of the new verification process.

“When they were required to prove their earnings, that required a level of computer literacy that some people don’t have and given how chaotic the system (was) and the stress the technology was under, sometimes it didn’t work,” said Christine Hastedt, senior policy adviser at Maine Equal Justice, a Portland nonprofit that has worked with clients to resolve overpayment decisions.

Congress introduced the extra verification in an attempt to prevent widespread fraud in the program, allegedly perpetrated by international criminal syndicates using personal information stolen in huge data breaches over the year, Hastedt said.

In an effort to get as much money as possible to unemployed Americans during the frantic early days of the pandemic, unemployment bureaus in Maine and elsewhere dropped the usual anti-fraud safeguards. Shortly after PUA was implemented in Maine, the state was swamped with fraudulent claims made with stolen personal information. Maine canceled at least 50,000 claims less than a month after it started accepting PUA applications in May 2020.

Verification was an appropriate measure, but it added a level of complexity to an unemployment system that was already overburdened, Hastedt said. Many of the people Maine Equal Justice counseled thought they had already uploaded necessary documents, weren’t sure how to proceed or were caught off-guard by repayment demands.

“The real bad guys here are not these people who became unemployed in a pandemic and turned to a program that was appropriately there for them and then through no fault of their own had an overpayment,” Hastedt said. “Here you are, unemployed, with no income, trying to make it, and then you get a letter saying you owe $10,000. Can you imagine the anxiety that provokes?”

For Mark Bartlett, repaying PUA benefits he collected in 2020 and 2021 means putting his goal of becoming a full-time artist on hold.

The former university professor left his job in the United Kingdom five years ago and started an online business as a freelance editor for academic papers. Bartlett, 64, moved back to Maine in 2019 and filed for PUA benefits after freelance work dried up – not a result of the pandemic, but because of industry consolidation, he said.

Despite that, he qualified for PUA benefits and started receiving checks soon after applying.

“They didn’t ask for a tax return, they asked a general set of questions: ‘What is your background?’ ‘What is your business?’ ” Bartlett said. “It was very minimal – I didn’t have to give them proof of my business at all.”

When the income verification rules came into effect, Bartlett ran into trouble. He wasn’t able to provide a 2019 tax return or proof of his freelance business, done through a third-party online service.

“The sanctioned concept of self-employment fails to recognize, and provide a way to document, through forms, the actual work done by many who are self-employed and support themselves and others,” Bartlett said. “If you get stuck in the informal economy, there is no acknowledgement of what happens when you fall out of the system.”

Now he owes about $16,000 in overpaid benefits. His appeal was denied.

The sum is huge for someone who was semiretired and starting work as a professional artist. Bartlett now drives a taxicab in Brunswick to make ends meet and save enough to pay down his debt.

“Why would they have given me the benefits in the first place?” he said. “Here I am thinking, ‘Wow, this is great; I can transition and be an artist and develop a studio.’ Then boom, it gets ripped out from right under me after a year and a half.”

CORRECTION: This story was updated at 10 a.m. Monday, March 28, 2022, to remove outdated information about interest penalties for jobless aid overpayments.