Amid frustration, Whitmer lobbying feds to broaden waiver for jobless overpayments

Four advocacy groups have asked Gov. Gretchen Whitmer and Unemployment Insurance Agency officials for more leniency toward those unwittingly overpaid by the agency during the pandemic who are being asked to pay back thousands of dollars. 

The groups asked the governor in a Tuesday letter to broaden the waivers she’s already granted to save people the frustrating and costly process of appealing the agency's decisions. Some individuals are facing repayment demands between $20,000 and $50,000, the letter said. 

"Despite assurances of a waiver from the governor, the agency has only granted waivers for a small subset of those it considers a result of 'agency error,'" said the Tuesday letter from Michigan United, the Michigan League for Public Policy, the Sugar Law Center for Economic and Social Justice, and the Michigan Poverty Law Program.

"Even now, more than 20 months after it granted benefits, the agency continues to issue these letters declaring claimants to be retroactively ineligible and to attach frightening bills," the groups said.

Whitmer told The Detroit News Wednesday her administration is working on a fix and is in discussions with the U.S. Department of Labor on the matter.  

"I agree with the spirit with which they are pursuing this," Whitmer said of the letter. "We're trying to get the ability to have a broader waiver through the federal government." 

But the groups maintain the language needed to grant the waivers is already in state and federal law. The forgiveness only needs to be applied — and quickly — as tax season approaches and the claimants risk garnishments or penalties because of the alleged debt, they argue. 

Tuesday's letter came after thousands of Michigan residents received repayment demands from the state for federal jobless aid the agency said they were overpaid during the pandemic. The overpayments occurred as the agency was working to implement new federal COVID benefits amid a backlog of thousands of claims, persistent attempts at fraud and public pressure to deliver benefits more quickly.

A recent audit found preliminary numbers indicate at least $3.9 billion in ineligible payments were made to about 340,000 Pandemic Unemployment Assistance recipients. The agency has paid a total of $39 billion in unemployment aid to 3.5 million Michigan residents since March 2020.

The Unemployment Insurance Agency has created a website to guide people who received notice of overpayment and restitution at https://bit.ly/3Ejktal.

How overpayments occurred

In many cases, the state agency skipped verification steps at the front end of the jobless aid process to speed payments and, in doing so, approved claims or claim amounts that were later flagged as incorrect. In other cases, advocates maintain the claimants being asked to repay were actually eligible for unemployment but can't get through to a claims adjudicator or through a backlogged appeals process to prove it.

"...the agency acknowledged making dramatic errors in the application of that (federal) criteria, and the agency is just now reviewing many files and reversing its decision to pay benefits," the four groups said in their Tuesday letter.

The liberal-leaning groups asked Whitmer to intervene and force the agency to acknowledge and use "the broadest possible interpretation" of state and federal waiver criteria. Specifically, the groups noted federal guidance related to pandemic aid is much broader than the state's and allows waivers where repayment "would cause financial hardship" or where forced repayment "would be unconscionable."

"Over the last two-three months, the UIA has not responded to requests to use this tool for relief of Michiganders," the letter said. "Other states have recognized the urgency of granting this relief and have adopted this standard by administrative rule."

Whitmer on Wednesday framed the overpayments as at least partly the fault of the federal government. Nonetheless, she said the agency is working with the U.S. Department of Labor to seek a broadened waiver policy. 

"We are pursuing that with the feds and hopeful we can get that done," Whitmer said. "Because I really don't believe anyone should be on the hook for a policy change that came from the feds and rendered people who thought they were in compliance out of compliance through no fault of their own."

Different recipients affected

The recipients looking for waivers fall into a few different categories. 

A large chunk of those who were sent overpayment letters — about 648,100 — were notified in late June that they had selected one of four qualifying criteria for Pandemic Unemployment Assistance that the state had incorrectly listed on the application. The U.S. Department of Labor flagged the issue for months before the state finally reached out to people in June, according to emails and a state audit.

When the letters were issued in June, Whitmer said she would issue waivers for those individuals affected by the state error. Those who failed to re-attest to their qualifications were issued waivers automatically, but thousands others who attempted to re-attest had to go through additional verification and appeal steps. 

Thousands of other claimants issued repayment notices don't fall into the ineligible criteria category. Instead, some made a mistake early in the process that wasn't caught until months later because of delayed verification reviews by the agency. 

Groups upset with state

By the time the mistake was caught, individuals had spent the unemployment money and were unable to meet the state's repayment demands. 

"It must be emphasized that the benefit payments were issued to these workers due not to any fault of their own, but rather, due to failure to properly or timely review applications or other submissions," the groups' Tuesday letter said. 

Tony Paris, a lawyer with the Sugar Law Center in Detroit, took issue with descriptions titling the individuals mired in the pandemic jobless aid debacle as "overpaid" or "ineligible." Many of his clients, he said, were eligible and still are eligible but don't have the time, resources or access to prove it. 

"There are much more folks not being reported who would be eligible under either criteria if they just for the love of God could get a day in court or actually speak with an adjudicator," Paris said. 

People attempting to appeal their overpayment notices are entering a surge of appeals pending before dozens of Michigan administrative law judges. 

In late November, those judges faced a queue of about 4,500 cases — even after the state hired six additional judges and borrowed three others from other areas to help process the surge that peaked between July and September.

In some cases, the administrative law judge has deemed a person ineligible under the old criteria and granted them a waiver because of an agency error only to have that determination appealed by the agency to the Unemployment Insurance Appeals Commission, Paris said. 

Individuals whose cases are still pending face uncertainty in the new year as taxes come due, and when "agency actions are expected to trigger a new round of garnishment of tax refunds and much more expensive consequences," the letter said.

"In addition to creating great anguish for claimants, this is also damaging to the public perception of the administration and damaging to Michigan’s economy," the group's letter said. 

eleblanc@detroitnews.com