State looks to claw back $350 million in unemployment benefits

That's a little less than 3 percent of the $12.6 billion in claims the state paid over that period.

Most of the overpayments – about $258 million – were identified this year. About half of those went to people that the state says failed to submit documentation the federal government requires to get Pandemic Unemployment Assistance.

This PUA program is one of several boosts Congress added during the pandemic to increase payouts across the country. It helped people who ordinarily wouldn't qualify for unemployment benefits, including the self-employed and independent contractors.

But PUA recipients who got overpayment letters in recent months told WRAL News they believe they sent the state everything asked for to prove eligibility. Now, they're facing four- and five-figure collection demands from the state.

Tyrus Catoe, of LaGrange, got a letter telling him to pay back more than $11,000.

“I haven’t the slightest idea (what happened)," Catoe said this week. "I sent all the documentation in that they needed.”

Tiesha Council, of Winterville, got an overpayment letter for more than $2,700. She, too, said she sent DES what she was asked for. Altogether, WRAL heard in recent weeks from half a dozen people who got overpayment letters but felt they'd proven their case.

“I don’t see why I have to pay it back," Council said Wednesday. "It's frustrating."

DES spokeswoman Kerry McComber said there's no such problem this time.

There's no past income threshold to qualify for PUA, McComber said, but it's about the timing. It seems some people – who provided WRAL with screenshots showing they uploaded tax documents or pay stubs to DES' system to prove past employment – submitted information from 2019 when they should have submitted information from 2020.

"They didn’t ask for that," Catoe said. "They just asked for the tax return prior to the pandemic.”

Catoe then voluntarily sent WRAL his 2020 tax return showing a small amount of income in addition to his unemployment payments last year.

Council said that, not only was she told to upload information from 2019, a DES call center agent said she needed to see only the first six pages of that tax return. Later, another agent said that wasn't enough, Council said.

“I said, 'I sent in my stuff,'" Council said. "She said, 'We didn’t get all of it.' And I said, 'I did what the lady told me to.' … She said, 'I’m sorry she told you that. We need the whole thing.'"

Others who reached out to WRAL about PUA documentation said they were told to resubmit information they had submitted last year.

Most of that has calmed down, but the PUA documentation process seems to have injected at least some confusion. McComber said DES would look into individual cases, and WRAL forwarded names and basic complaints to the office this week.

It can take years to recover overpayments, and McComber said DES "is still actively recovering overpayments from programs that were available during the Great Recession."

Catoe's overpayment letter lays out a $30-a-month minimum payment, which would take more than 30 years to cover the $11,664 that the state says he owes. The letter says meeting that minimum wouldn't stop other collection efforts, including wage garnishment.

Typically, money gets clawed back a variety of ways, McComber said:

DES put the total amount recovered since April 1, 2020, at $61.5 million. About half of that was recovered in 2021, the division said.

That doesn't necessarily mean the overpayments were made during the pandemic, though, just that the money was recovered during that period.

This same caveat applies to overpayment figures DES provided: The state has flagged $350 million in overpayments since April 2020, but some of those payments went out to claimants before then and were discovered later.

Most of the money is from the pandemic, though. From October 2018 to March 2020, the state identified just $10.7 million in overpayments. It's so much higher now because there's more money involved – vastly more unemployment claims and much larger checks because the federal government boosted unemployment checks, first by $600 a week, then by $300 a week.

Since March of last year, DES has paid $12.6 billion in benefits to nearly 1 million people. Another 500,000 filed but didn't qualify for benefits.

The undertaking has been complex, with multiple federal programs layered on top of each other over the last year and a half, often requiring people to reapply for benefits as they moved from one program to another. Because of that, the state says it processed 3.7 million claims from 1.5 million people.

When WRAL asked DES for overpayment totals for this story, it took the division 10 days to answer.

The division also provided examples of how overpayments happen. Often, McComber said, a person goes back to work but continues to file for benefits without reporting their wages as required. The division catches that with a quarterly cross-match with employers, she said.

But one of the largest issues right now, totaling $129 million spread over 16,845 claimants, is people who failed to submit the required documentation for the PUA benefits.

"The federal Continued Assistance Act required claimants who received any Pandemic Unemployment Assistance (PUA) benefits on or after Dec. 27, 2020, to submit proof of prior employment within either 21 or 90 days, per federal guidelines," McComber said in an email. "Claimants could continue receiving benefits during that time. Those who failed to submit documentation by their deadline, or provided inadequate documentation, received an overpayment for all benefits they received going back to Dec. 27."