Texas overpaid $32M in unemployment benefits. Now it wants the money back

A small fraction of the overpayments are the result of fraud

Texas is trying to recoup tens of millions of dollars in unemployment benefits after officials discovered that some out-of-work Americans were collecting more jobless aid than intended.

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The Texas Workforce Commission, the state’s agency that provides unemployment benefits, said this week that more than 46,000 Texans who had recently lost their jobs were overpaid by a combined $32 million. How much extra money each person received varies; on average, it would be about $700 per person since March, when the novel coronavirus took hold in the U.S.

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A small fraction of the overpayments are the result of fraud, Cisco Gamez, spokesperson for the state agency, told FOX Business. Since the beginning of the year, the commission has discovered 794 instances of fraud — or roughly 1.2 percent of notices of overpayment.

“The majority of these are people, or their employers, who may have made an error,” Gamez said. “It could be that some of them are working part-time when they requested payments, and they didn’t put in the hours or wages that they earned during that time. Eventually, that info comes back to us, and we’re like, ‘Hey we overpaid you.’”

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State law requires that individuals who received a bigger check than they were eligible for repay the money. Overpayments will stay on individuals’ records until the money is returned. Typically, if an individual receives a notification of overpayment but does not return the money, the state comptroller can withhold certain funds, including additional unemployment benefits, according to the agency’s website.

But in March, the agency temporarily suspended that rule and said it would continue to pay out benefits, even if they owe the state money in overpaid unemployment aid. Claimants who received the notice can appeal the decision, or strike up a repayment plan with the state.

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There is no statute of limitations on the debt. But unless it was deliberate fraud, the state will not charge interest. If the state determines the overpayment is unemployment fraud, the recipients owe a 15 percent penalty on the benefits that they incorrectly received.

If the error is solely the fault of the agency — a rarity, Gamez said — the recipient of the overpayment does not have to repay the money.

“We don’t send out a notice,” he said. “We don’t reclaim that.”

Overall, the agency has doled out roughly $16.9 billion in benefits since the start of the crisis to 3.7 million individuals. The outbreak of the virus, and subsequent lockdown, has triggered the worst economic downturn in almost a century: In the span of two months, the nation’s unemployment rate surged from a 50-year low to a 90-year high.

On Thursday, another 117,000 Americans filed for unemployment aid in Texas -- a 20 percent jump from the previous week, as a resurgence in COVID-19 cases threatens to derail the labor market’s nascent recovery.

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