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Thousands forfeit UI benefits because of past debts to DES

Arizona holding some unemployment benefits hostage
Posted at 8:21 PM, May 29, 2020
and last updated 2020-05-29 23:21:58-04

PHOENIX — In 2012 Letitia LaMar, of Glendale, applied for unemployment benefits after being laid off her job with a major retailer.

Several weeks later, she found a new job.

"I called DES unemployment to report that I have returned to work and the agent told me that she would process my paperwork," she said. "And that was what I presumed would happen."

But when LaMar applied for benefits through the Arizona Department of Economic Security (DES) this time around, she says she found out that didn't happen.

"I was told that I would not be receiving that unless I paid $1176," LaMar said. "I said, 'what do I do? I don't know how to fix this.'"

LaMar had received what DES calls an overpayment of benefits the state says she was not entitled to back in 2012. Something that can completely derail an unemployment claim, and she says she had no idea.

"I never received any documentation," she said.

Elizabeth Shaw of Gilbert recently found out she was on the hook for an overpayment too. She applied for unemployment insurance after being laid off in Mid-March.

"I saw a message that said disqualified, so I didn't know what that meant. So I kept calling. I finally waited on hold for five hours one day to speak with someone, and that's when they told me you have an overpayment. You won't qualify for any benefits."

Shaw's debt is from 2017. She says she never got a notice of an overpayment either.

According to information provided by DES, "As of 04/30/20, there are 89,699 clients with an overpayment balance."

Employment attorney Nina Targovnik with Community Legal Services, a law firm that provides free and reduced-price legal representation for low-income claimants, says a lot of people have no idea that they even have a balance.

"And then all of a sudden it comes up as an active issue," she said.

She says the state classifies overpayments in three categories and depending on which one you have; claimants could be left with nothing.

The lowest level with the most lenient penalties are administrative overpayments.

"Means that it wasn't your fault. So let's say you got unemployment your former employer, appealed, you lost at the hearing level. Now you have an overpayment," she said.

She says state law allows those types of overpayments to be waived or that 25 percent be deducted from the weekly benefit until the balance is paid off.

"They (DES) haven't been waving them that much in the past couple of months but in previous years, they've waived a lot of them," she said.

The next level is a non-fraud overpayment.

"If you omitted something or maybe the DES representative heard you wrong and wrote down things that weren't accurate. You could have a non-fraud overpayment." Non-fraud cannot be waived, but Targovnik says there are no penalties associated with it, and DES deducts 50 percent of your benefit to offset the balance until it is paid off.

The final category is fraud overpayment. She calls them, "the worst and most difficult kind."

"This means that you've lied to DES or you had two jobs you didn't report your earnings to DES, and of course, they found out about it and now you have this fraud overpayment." Or just plain ignorance about how the system works.

Targovnik says in the case of a fraud overpayment, "You have to pay it all back before you're eligible for unemployment. If it's within a two-year period they can apply an administrative penalty." That means for each week you collected unemployment that you did not qualify, you can be delayed by four weeks, even after you've paid it off.

The delay increases to ten weeks if it is found that you intentionally lied or misrepresented facts.

This is the breakdown of current cases by category according to DES:

  • Fraud: 36,716
  • Non-Fraud: 35,015
  • Administrative: 26,133

Cases with overpayments are entitled to appeal their determinations by filing an "untimely appeal."

"If you legitimately made a mistake and they classified it as fraud you can you know explain to the judge what happened and the judge can make the determination," Targovnik said.

Shaw did appeal. The administrative law judge ruled against her.

"Once it was explained to me how unemployment works I realized I did get overpaid and I'm willing to pay it back. But with interest and fees paying the debt back, the debt in full was an impossibility.

"If I had the money to, you know pay for my overpayment, then I wouldn't really need unemployment," she said.

Fortunately, the mother of four children was able to get immediate help from food banks and rental assistance through And in May, the restaurant where she works opened back up with reduced hours.

"I'm just working as many hours as I can," she said.

After weeks of calling, faxing and re-faxing LaMar's case is now working its way through the process.

"I was encouraged and told keep fighting. Call DES and have my case reopened. And that's exactly what I did. I called I spoke to another agent he reopened it," she said.

Her appeal will is scheduled to be heard on June 8.

"I'm still here. I'm still smiling. I'm just praying and believing that my prayers will be answered with this approved it keep moving," she said.

More information about filing an untimely appeal here.

Contact Community Legal Services here.