CHAPTER 6 OVERPAYMENTS

CHAPTER 6

OVERPAYMENTS

IN GENERAL

This chapter deals with state law provisions that pertain to identifying, establishing, and collecting UI

benefit overpayments. All states¡¯ laws have provisions addressing these matters. A state¡¯s law generally differs

in the treatment of overpayments in which the individual is not at fault and overpayments in which the

indiviudal has committed fraud or willful misrepresentation, or concealed material facts. In addition, the state

laws contain provisions for fines and imprisonment for willfully or intentionally misrepresenting or concealing

facts which are material to a determination concerning the individual¡¯s entitlement to benefits.

NONFRAUD PROVISIONS

WAIVERS¡ªSome states provide that, if the overpayment is without fault on the individual's part, the

individual is not liable to repay the amount overpaid. The following table lists the states that waive certain

nonfraud overpayments.

TABLE 6-1: WAIVER OF NONFRAUD OVERPAYMENTS

State

AK

Additional Information

If timely request, received benefits in good faith, and repayment would be against equity and good conscience.

AL

If not the fault of the individual and repayment or reduction would either defeat the purpose of the law or be against equity and

good conscience.

If not the fault of the individual, except if overpayment results from a back pay award or from Java decisions. When OP results

from benefit payments based on exempt or non-covered wages erroneously reported by an employer.

AR

If not the fault of the individual and repayment would be against equity and good conscience.

CA

If nonfault OP. If individual has change of position and extraordinary hardship.

AZ

CO

CT

Depending upon financial condition, future earnings potential, whether individual detrimentally changed position in reliance on

OP. If individual relinquished rights to other governmental benefits to which he/she would have been entitled.

If individual died, can¡¯t secure full time job because of health, overpaid by retrospective application of legislation change,

appeal reversal and didn¡¯t receive adequate notice to repay benefits, reliance upon the receipt of benefits, admin error, or OP

equal or greater than 2 x WBA at time OP made and annualized family income within last 6 months is ¡Ü 150% poverty level.

DC

If nonfault OP and recovery of OP would place an extraordinary financial hardship on individual.

FL

If OP is result of ER failure to respond timely to claim notice.

GA

If recovery would cause direct impact or loss of ability to obtain minimal necessities of food, medicine, and shelter. (If

recommendation from Hearing Officer, Court findings, and by virtue of discharge in bankruptcy.)

HI

If nonfault OP and recovery would be against equity and good conscience.

ID

IL

If departmental error or if employer misreported wages and individual could not have been reasonably expected to have

recognized error.

If nonfault OP on individual¡¯s part, waiver is requested by individual, and if such recoupment would be against equity and good

conscience. Waiver may be denied with respect to any subsequent week if, in that week, the facts and circumstances upon

which waiver was based no longer exist.

6-1

OVERPAYMENTS

TABLE 6-1: WAIVER OF NONFRAUD OVERPAYMENTS

State

IN

IA

Additional Information

The benefits were the result of payments made during the pendency of an appeal before an administrative law judge or the

review board under which the individual is determined to be ineligible for benefits or because of an error by the employer or the

department; and repayment would cause economic hardship to the individual. This applies only to claims filed against nonreimbursable employers.

Benefits paid not as the result of fraud or willful misrepresentation, if the employer did not participate in the initial

determination and overpayment occurred as a result of a subsequent reversal on appeal.

KS

Extreme hardship or fault of the agency.

LA

If nonfault OP and recovery would defeat purpose of benefits otherwise authorized (such as cases of extreme financial

hardship).

ME

If nonfault OP and inability to pay upon Commission approval.

MD

If timely request; nonfault OP; result of agency error, employer error, agency redetermination, or appeal; individual must lack

ability to repay; household income must be below Federal minimum poverty level for family size and area of residence, and OP

can¡¯t be over 1 year old unless pending appeal outcome.

MA

If nonfault OP and an economic hardship exists.

MI

MN

If not the fault of the individual and repayment would be against equity and good conscience; and any interest shall be waived.

OP result of administrative/clerical error and individual is unable to pay due to indigence or financial hardship.

If an unemployment law judge¡¯s order allows benefits because of a quit or discharge, and the decision is reversed by the

Minnesota Court of Appeals or the Supreme Court of Minnesota.

MT

Agency error.

NV

Agency error or disability precluding future employment during collection period.

NH

If nonfault OP.

NJ

If nonfault and individual is deceased, permanently disabled and no longer able to work, or the recovery of the OP would be

patently contrary to principles of equity.

NC

Depending on individuals degree of fault; if against equity and good conscience.

ND

If nonfault OP and extreme financial hardship.

OH

If typographical or clerical error in decision, or error in employer's report.

OR

If recovery is against equity and good conscience. Individual¡¯s financial ability to repay the OP is considered.

RI

If nonfault OP.

SC

If agency or employer error. Also depends on individual's ability to repay.

SD

If nonfault OP, inability to repay (AWW for prior 12 months, liquid or readily convertible assets, spousal income, and financial

emergencies).

TN

If nonfault OP.

UT

If nonfault OP. Individual member of household with income ¡Ü 70% Federal "Lower Living Standard Income Level."

VT

OPs not resulting from non-disclosure or misrepresentation by individual will be waived after fact finding has been conducted.

VI

If nonfault OP.

WA

If against equity and good conscience for Department to require repayment of full amount; if repayment would deprive

individual of income required to provide necessities such as food, shelter, medicine, utilities, and related expenses.

WI

TRA OP when individual's income is below Federal poverty guidelines.

WY

If nonfault OP and OP was caused by agency error or individual has extreme financial hardship.

RECOVERY PROVISIONS¡ªAll state laws provide for recovering benefits paid to individuals who later are

found not to be entitled to them. In addition to direct repayment, states utilize several tools to recoup these

funds. States may, at the discretion of the agency, recover overpayments by deducting from future benefits

payable (benefit offset). In December 2010, states acquired the ability to recover overpayments from an

individual¡¯s Federal income tax refund through the Treasury Offset Program. They also may offset

overpayments with state tax refunds due to the individual, or by the interception of lottery winnings, or they can

compel repayment by pursuing civil action in state court. Finally, some states may assess interest and penalties

on outstanding overpayment balances. The following table provides information about how states recover

nonfraud overpayments.

6-2

OVERPAYMENTS

State

TABLE 6-2: RECOVERY OF NONFRAUD OVERPAYMENTS

Benefit Offset

Offset with State

Civil Action

Tax Refunds1

Permitted2

Number of Years Limited

No

Yes

Yes

Interest Assessed

AL

Reduction in WBA

100%

AK

100%

No

No

No

AZ

50% - 100%

No

Yes

No

AR

100%

4 years from date of final determination

Yes

Yes

CA

25%

6 years from date notice mailed

Yes

No4

No

10% per year from

month after OP

established until it is

final

10% annually once

final OP has force and

effect of judgment of

circuit court

No

CO

No

No; may write-off as uncollectible after 8

years

5 years from end of BY

No

Yes

No

No

Yes

No

DE

25%

50%; if WBA <

$100, then 25%

50%

DC

100%

FL

100%

GA

50%

HI

100%

ID

100%

IL

IA

25%

100%; if agency

error, then 50%

100%

KS

100%

KY

25%

CT

IN

3

No

Yes

Yes

Yes

Yes

3 years from date OP is established

No

Yes

4 years from date OP is established

2 years from date of mailing notice of

redetermination or final appeal decision.

After, may offset % agreeable to individual

5 years from date of final determination

Yes

Yes

No

Yes

Yes

Yes

No

5 years from date OP decision issued

Yes

Yes

No

3 years from BYB of claim

Yes

Yes

No

10 years from date of last activity

Yes

No

Yes

Yes

Yes

Yes

No

No

5 years from last day of BY

No

No

No, unless and until a

civil judgment is

entered

No

No

No

1.5% per month if 2

years old

No

LA

100%

No

Yes

Yes

ME

10% of 1st $100

WBA; 50% of rest

No

Yes

No

No

Yes

Yes

No

1% per month starting

1 year after decision is

set up in system

No

No

Yes

Yes4

No

3 years from date of payment

Yes

Yes

Yes

No

1% per month on

principal balance after

1st full month OP

established

MD

MI

100%

100%; 50% if

nonfault and

individual requests

Up to 20%

MN

50%

6 years from date OP is determined

Yes

Yes

MS

100%

5 years from last day of week overpaid

No

Yes

MO

100%

Yes

Yes

No

MT

50%, higher if

individual permits

Yes

No

Yes

3 years from end of BYE on which overpaid

weeks were paid

Yes

Yes

No

5 years from date OP established

No

No

No

MA

NE

NV

Any amount per

week and any amount

up to MBA

50%

No; may write-off as uncollectible after 5

years of no activity

5 years; must file lien against individual's

real and personal property to extend to 10

years

6-3

OVERPAYMENTS

State

Reduction in WBA

NH

1% - 10%

NJ

100% or 50%

NM

NY

100%; 50% or 75% if

request approved

50%

NC

50%

ND

Minimum 50%

OH

100%

OK

100%

OR

100%

PR

33?% (nonfault);

100% (fault)

50%

PA

TABLE 6-2: RECOVERY OF NONFRAUD OVERPAYMENTS

Benefit Offset

Offset with State

Civil Action

Tax Refunds1

Permitted2

Number of Years Limited

10 years from date OP decision is final

Interest Assessed

1% per month on

principal balance from

1st day of month after

decision if not paid

within 60 days

2% annually 6 months

after debt established if

no formal payment

agreement

No

Yes

No

Yes

Yes

No

Yes

Yes

No

No

No

No

No

3 years from date OP is established

No

3 years from date decision is final

No; except for administrative error, 1 year

from expiration of BY current at time OP

established

1 year from week decision became final for

nonfault OPs. No time limit for fault OPs

4 (nonfault), 7 (fault) years from date of

application for benefits

5 years from date OP established

4

Yes

Yes

Yes

Yes

Yes

Yes;

administrative

error

No

Yes;

administrative

error

No

18% starting 180 days

after establishment of

OP or 180 days from

date of final appeal

determination

No

1% per month starting

date OP determined

Yes (if fault OP)

Yes

No

Yes

No

No

If fault, 1% per month

from 1st day of month

following 60 days after

final decision

Computed annually

based on the IRS rate

No

RI

100%

No

Yes

Yes

No

SC

100%

No

Yes

No

SD

100%

No

No

Yes

TN

100%

No

No

Yes

TX

100%

No

Yes

No

12% per year upon

establishment of fault

OP or 6 months after

establishment of

nonfault OP

No

1% per month from 30

days after served

(when becomes

judgment)

UT

50% (nonfault);

100% (fault)

Yes (fault only)

Yes (fault only)

No, unless it goes to

judgment

Yes

Yes

No

Yes

Yes

No

Yes

Yes

No

VT

VA

VI

100%

100%; 50% if

administrative error

Depends on amount

and ability of

individual

WA

50%

WV

100%

WI

100%

No limit for OP absorptions on subsequent

BYs

If nonfault, 3 years from date decision is

final. If fault, 8 years from effective date of

judgment lien

5 years from determination date

No

2 years from date OP was established

No

5 years from last day of week overpaid

No

6-4

No

Yes

No

No

1% per month (simple

interest) after ¡Ý 2

minimum monthly

payments are

delinquent

No

Yes

Yes

No

OVERPAYMENTS

State

Reduction in WBA

WY

100%

TABLE 6-2: RECOVERY OF NONFRAUD OVERPAYMENTS

Benefit Offset

Offset with State

Civil Action

Tax Refunds1

Permitted2

Number of Years Limited

First 5 years from effective date of claim

No

Yes

resulting in OP

Interest Assessed

No

OP: Overpayment

1

In AZ, DE, DC, MD, MN, NJ, ND, OR, VT, VA, VI, and WI provision found in non-UI law (all other states¡¯ provision found in UI law).

Provision found in UI law.

3

A penalty of $20 or 25% of outstanding balance is imposed.

4

In CA regarding OP to an elected official, in addition to the civil action, summary judgment proceedings may be initiated if the claim was based

solely on income received as an elected official. In MA and NC state does not pursue civil action because of policy.

2

FRAUD PROVISIONS

RECOVERY PROVISIONS, FINES, & CRIMINAL PENALTIES¡ªFor fraud, including willful

misrepresentation generally and concealment of facts, states utilize the same methods to recover overpayments

as they do for nonfraud overpayments. However, most states can pursue criminal action in court, which can

lead to monetary assessments and prison sentences. Further, states can administratively assess additional

monetary fines or penalties. Pub. L. 112-40 enacted October 21, 2011, imposed a mandatory penalty assessment

for fraudulent claims. States are now required to assess a penalty of not less than 15 percent of the amount of

the erroneous payment on claimants committing fraud in connection with state and/or federal unemployment

compensation programs. The penalties are mandatory for any fraudulent payments established after October 21,

2013, and the penalty assessments must be immediately deposited into the state¡¯s account in the unemployment

trust fund and used for the payment of unemployment compensation.

Although UI benefit fraud typically involves an individual¡¯s attempt to obtain or increase benefits, it also

includes employers who attempt to prevent or reduce benefits to eligible individuals and employers who abet an

individual¡¯s attempt to fraudulently claim benefits. The following table reflects state law provisions on how

states treat benefit fraud. A state¡¯s policy may be different (e.g. it may not, in fact, pursue criminal prosecution)

and can change.

TABLE 6-3: TREATMENT OF FRAUD

Recovery of OPs Through Offset

State

Benefits

Number of

Reduction

Years

in WBA

Limited

Monetary Assessments

State

Tax

Refunds

Interest

Charged

Fines or Penalties

on Claimant

4 x WBA to

maximum benefit

amount

50% of each fraud

OP

Max Prison Time Imposed

When Fraud Committed:

Fines or

Penalties on

Employer

By Claimant

By Employer

$50 ¨C $500

1 year

1 year

X1

5 years

X1

AL

100%

6 years from

date OP is final

Yes

Yes

AK

100%

No

No

No

AZ

100%

No

Yes2

10% per year

X1

$2,500

AR

100%

No

Yes

10% of OP

$20 ¨C $200

CA

100%

6 years from

mailing

Yes

10% per year

7% until

summary

judgment

filed. 10%

until paid in

full

30% of OP

$20,000

1 year

minimum

1 year

minimum

CO

100%

No

No

No

Penalty: 50% of

OP. Fine: $25 ¨C

$1,000

$25 ¨C $1,0003

6 months

6 months

CT

100%

8 years

Yes

1% per

month

X1

X1

1 year

minimum

1 year

minimum

6-5

Depends on

claimant's

record

60 days

6 months

60 days

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