When Tim Scott and his wife Sheila Kackley began receiving unemployment during the early months of the pandemic they say it was a godsend. About a year later, the couple—who live in Jackson and have been self-employed consultants for decades—received a letter from NH Dept. of Economic Security (NHDES) saying they had been overpaid and needed to pay back more than $40,000.
Like many, the couple experienced economic uncertainty when the pandemic hit and businesses began closing, but being self-employed, they were not initially eligible for relief funds. “We saw the writing on the wall in March 2020,” says Tim Scott, explaining that the Wentworth Hotel—his wife’s primary client—was closed, and the Upper Valley Land Trust canceled his contract. Scott says the couple didn’t know what to do so they called their state representatives and were told about a new program created by the federal government called the Cares Act that would apply to self-employed people.
They then called the state, and Scott says he was told to apply even though he and his wife weren’t typical unemployment candidates because of their self-employment status. “[NHDES] told us that we’d get denied at first because we’re not the typical unemployment candidates but that this would be overridden, and we would eventually be paid because we were self-employed, and that our situation was covered with the Cares Act.”
And that is exactly what happened, Scott says. After an initial denial, the couple eventually began receiving weekly state payments of $168 each and between $300 and $600 from the federal government for about a year.
“It was a godsend, honestly,” Scott says. “It wasn’t like we received a great landslide of money, but it was just enough to cover us and to keep going.”
Now, Scott says what was a necessary and helpful benefit has “turned out to bea nightmare.”
Shortly after the couple went back to work in March 2021, they received the letter from NHDES informing them they had been overpaid and should never have received unemployment. The Scotts began the state’s appeals process shortly after receiving the letter, and despite providing check stubs and other information to prove they were eligible to receive the funds, they have yet to be forgiven. The couple has now hired an attorney to help them through what continues to be a complicated and tiring process, Scott says.
“Unfortunately, Tim and Sheila’s situation is far from unique,” says Craig McMahon, an attorney representing the Scotts. “For many people whose first contact with the UI [unemployment insurance] system was during the pandemic, the department’s dysfunction has really damaged their faith in good, responsive government.”
McMahon, who represented the couple in their latest appeals hearing this spring, says over the past two years he has represented around 40 claimants in similar cases. “I’m sure there are thousands of cases,” he says.
NHDES paid approximately 175,000 workers over $2 billion in state and federal overpayments during the 2020-2021 pandemic. A total of 16,204 individuals were found to be overpaid state and/or federal benefits and of that number, 6,546 were found to be “with fault.” These individuals were eligible to appeal the determinations and go through multiple levels of appeals. “Once these people exhaust their appeal options and if they are ultimately found to be with fault. Then they need to repay the benefits back to NHDES or enter into a payment agreement.” says NHDES Deputy Commissioner Richard Lavers.
Lavers says NHDES cannot discuss the details of any one case. However, those found without fault, he says, are automatically waived from needing to pay back benefits received. State Administrative Rule 50203 defines situations where someone is without fault and with fault. Without-fault situations could include departmental errors or employer errors,
With-fault situations include circumstances where an individual makes a willful misrepresentation to NHDES or when someone doesn’t reveal something on their claim that would have been reasonable to provide, such as whether they were laid off or chose to not seek employment.
“The most common situation during the pandemic was that a person was placed in the incorrect program,” Lavers says. “There were a lot of different state and federal programs. The department can screw up and did screw up, and in those situations, people are without fault.”
Of the 16,204 found overpaid, 4,486 individuals were found overpaid without fault. Of these 4,486 individuals, 1,990 were overpaid state UI benefits and because these were state benefits and they were without fault, the associated state portion of the overpayments—totaling $6.1 million—were automatically forgiven, Lavers says. The other 2,496 individuals that were overpaid but without fault were overpaid federal pandemic benefits totaling about $6.6 million.
Lavers says that in order to get a federal overpayment forgiven, people must complete the waiver process per requirements from the federal government. “At first, the waiver process was frustrating for people because it required the individual to fill out a financial affidavit and many people did not want to provide this type of information,” he says. “Then, once submitted to the department, each one had to be reviewed individually by staff, so the process was slow, time consuming and frustrating both for the individual seeking the waiver and the department in processing the waiver.”
The total number of individuals found overpaid for failure to provide the necessary documentation to substantiate prior self-employment was 5,172, which is the balance unaccounted for from the 16,204 overpaid people. Lavers says 2,849 individuals that are eligible for a self-service waiver have yet to complete the waiver and that those found to be with fault are not eligible. The amount of federal overpayments owed by these 2,849 individuals that are eligible to be completely erased but have not used the process is $14 million.
“Tim and Sheila received benefits for a year and then one day they got a letter in the mail saying you need to give us all that back,” McMahon says. “It’s a bait and switch, and I really can’t underestimate the emotional effect it’s had on them and my other clients as well.”
Scott says every day he goes to his mailbox he waits for more bad news. “You never know what’s going to come crashing down,” he says.
For those unable to repay all of the money at once or within the time period established by department repayment guidelines, payment agreements require the individual to fill out a financial affidavit certifying available income and current expenses before NHDES determines a monthly payment amount.
For McMahon, it’s not about repayment options, but rather, he says, the fact that his clients provided all of the required documents, including years of tax information, and are still being required to pay back the funds. n