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Unemployment payback: Staffers say Nebraska labor department knowingly overpaid, wrongly approved claims

Current and former employees say staff and management were too overwhelmed to stop or fix the problems.
Published: Apr. 28, 2021 at 9:56 PM CDT
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OMAHA, Neb. (WOWT) - Employees within the state Department of Labor are coming forward following several 6 News investigations centered around the state requesting unemployment repayments from Nebraskans.

The labor department is requesting the money be paid back saying the claims for pandemic unemployment benefits were incorrectly paid or had been overpaid.

“This is a year later that they’re sending out this notice — a year later that they’re sending out this error. How could they allow this to happen?” said one woman, who wished to remain anonymous. She told 6 News that the state said they incorrectly paid her for two claims; she said she only applied once.

Now, they say she owes them $27,000.

It’s the same story for another anonymous citizen, but on a smaller scale: He says the NDOL is requesting he pay back the $6,000 he made on federal unemployment, and that the state has taken that cash out of his current unemployment checks.

He said NDOL staff admitted it was a mistake.

“I know it’s an error, and I get it,” he said. “I just wish someone would take fault and fix it, but I don’t think they’ll do that.”

Hundreds — maybe thousands — of other Nebraskans are facing this issue, too.

Now, employees within the department whose identities 6 News is keeping hidden, say they saw this coming. They tell 6 News that when the pandemic hit, mistakes were knowingly made in order to keep up with the sheer number of claims pouring in. They say management failed to fix these problems.

“They got hit with so many claims — over 50,000 if I remember right,” one former employee said. “The time limit was normally 10 days for the employer to respond. They made a management decision that said because of the amount of claims — and most of them were pandemic-related — we’re not going to wait for the employer statements. If you don’t hear from the employer within five days, go with what the claimant told you.”

In an email, a current NDOL employee said that “an executive decision was made to pay people, and get money in their hands. This meant just push the claim through.”

In an unpublished ombudsman report obtained by 6 News, it said the combination of the pandemic, a newly implemented computer system, and the high number of employee turnover caused ‘the perfect storm’ in the department.

The report states that to keep up with the volume of incoming claims, contracted workers were hired to field calls and take over some of the responsibilities of adjudicators.

“You could process 20 claims in a day and get 50 the next day. So it was never a catch-up situation,” the former employee said.

The report, written by the now-retired state ombudsman Carl Eskridge, continues, “As contracted workers began doing more of the work of the adjudicators, adjudicators discovered that errors were being made, either by failing to provide benefits where benefits should have been paid, or by paying benefits to claimants that were not qualified, or in excess of the amounts they should have received, both of which resulted in subsequent overpayment issues.”

“They were just letting them go through because as soon as the claimant said ‘pandemic,’ and oh — open the flood gate! Then we were told, ‘Oh, if you catch one afterwards, correct it and create the overpayment. And that’s where the collection issue started.”

That’s why many Nebraskans are now receiving delayed notices requiring them to repay these overpayments.

Because of this flawed system, the number of fraud claims also increased dramatically. In a statement made by the Depart of Labor to 6 News earlier this week, nearly 5% of all paid pandemic unemployment claims were overpaid due to fraud or inadvertent error.

The current NDOL employee said the issues were apparent to adjudicators.

“Several adjudicators could see this as a huge mistake and voiced their concern of putting people in overpayment without their knowledge,” the employee said. “Management paid on claims which were not properly investigated. The adjudicators were so busy trying to keep up with getting claims done, teaching Nelnet people about adjudication and correcting Nelnet mistakes, plus our own work, we didn’t have time to look for fraud claims.”

“We were supposed to do our workload plus supervise these people. We were told basically not to try to retrain them, just process the claims. Just get them done and get them out, that was the wording. Get them done and get them out,” the former worker says.

The December audit of NDOL states: “It is apparent that PUA [Pandemic Unemployment Assistance] federal requirements were not met for all applicants, and the department lacked controls to ensure that claimants were eligible.”

The audit found that four in 10 claims filed before April 22, 2020, were approved for PUA despite not including COVID-19 as a reason for unemployment — which was required by the department. It also found that weekly certifications did not include COVID-19 reasons until the week ending July 4, 2020.

6 News reached out to Labor Commissioner John Albin for an interview, which he again declined. When asked about knowingly making mistakes due to the overwhelming nature of the pandemic, 6 News received this statement:

All states have faced an unprecedented volume of claims during the pandemic. However, NDOL has never instructed teammates to make deliberate improper payments to meet timeliness standards. NDOL officials met with the Ombudsman back in November of 2020. Several changes have occurred since that time including multiple changes to federal laws. NDOL will not be commenting further on this unpublished document from the Ombudsman’s office.

Nebraska Department of Labor spokesperson

Federal legislation passed in December in the coronavirus relief bill could allow for states to opt into implementing waivers to citizens who received an overpayment statement. This waiver would protect Nebraskans from repaying overpayments if the overpayment was made on the fault of the state.

The labor department told 6 News they plan to implement the waivers soon and that they will notify claimants when they are available.

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