Three Oregonians sued the Oregon Employment Department on Thursday over the state’s efforts to recoup jobless benefits it overpaid during the pandemic, alleging its process has been “chaotic” to the point of violating claimants’ constitutional rights.
The employment department overpaid benefits to at least 27,000 people during the pandemic and has been trying to recoup that money from many of them.
Thursday’s lawsuit, filed in Multnomah County Circuit Court, argues the collections process has been “incomprehensible” for those who received overpayment notices. The suit alleges that many people didn’t actually owe the money and that others were eligible for waivers but the department didn’t tell them so.
It seeks to restore their benefits, untangle the overpayments system and force the employment department to adopt a more coherent process for everyone.
The overpayment notices typically arrive many months after the original payments, and sometimes more than a year later. Kelsey McCowan Heilman, staff attorney for the Oregon Law Center, said the notices are cluttered with legal jargon and are frequently unintelligible.
People typically had no idea the state would want the money back and had spent their benefits long before they learned the state had decided they hadn’t been eligible for aid, according to the litigation.
“It is a terrible experience for people. It is so stressful. They don’t understand what’s going on,” said Heilman, whose organization brought the suit on behalf of its low-income clients. “They don’t understand why it’s happening a year later.”
The employment department said it is withholding comment until it has reviewed the suit.
The agency was thoroughly dysfunctional for much of 2020, hobbled by years of mismanagement, an obsolete computer system that dated to the 1990s and the unprecedented number of jobless claims after COVID-19 hit the state.
More than 600,000 received unemployment assistance during the pandemic, but Oregon was among the slowest to pay benefits. Thousands of people waited months for help, and the employment department’s phone lines were essentially inaccessible for several months because of the volume of calls and the department’s technical issues.
The state’s jobless rate has plunged over the past two years and Oregon now pays most jobless claims promptly. But new issues have emerged as the employment department reviewed its work from earlier in the pandemic and concluded thousands of people who received benefits should not have.
In many cases, the law requires the department to recoup those overpayments, oftentimes by withholding future jobless benefits payments. That sometimes means laid-off workers don’t receive aid at a critical moment.
Thursday’s suit alleges many of those benefits recipients really were eligible for funds but were classified as having been overpaid because of state administrative failures. The suit claims that the state failed to clearly explain why it considered them ineligible and that those targeted with collection efforts had “no reasonable opportunity to challenge the debt.”
Oregon lawmakers passed a bill a year ago that gave the employment department more authority to waive overpayments. But the lawsuit alleges that billing statements fail to inform workers that their debt could be erased.
The state form for requesting waivers requires detailed financial information to prove economic hardship and extensive documentation. But Heilman said most people who receive overpayment notices are eligible for a waiver, so she recommends people apply to have that debt forgiven – even if they’re not sure why they owe the money, or whether they really do.
Even if the state denies their waiver application, she said they should at least get a notice explaining why they don’t qualify.
“The notices are so confusing it can be really difficult to find out what kind of overpayment you have,” Heilman said. “I don’t see a downside to everybody applying for a waiver.”
— Mike Rogoway | mrogoway@oregonian.com | Twitter: @rogoway |
