Pa. slashing workers’ unemployment checks after paying them double by mistake

Majid Ali spent months shouldering mounting bills before finally receiving unemployment benefits.

The $195 a week was a relief to the behavioral health specialist, who was furloughed when Philadelphia schools shut down. Ali, 57, quickly spent the money to catch up on car payments, cable bills, and other expenses once he got paid in June.

Then Ali got more bad news.

In July, state officials at the Department of Labor and Industry said that due to their own error, Ali was issued “duplicate payments” of benefits, and they needed to recover the extra money. For the next eight weeks, Ali got just $98 a week to effectively pay back the state.

“I’m sorry, but this isn’t my mistake,” said the Port Richmond resident, who had to borrow money and pawn some belongings to scrape by.

Ali is not alone. Pennsylvania accidentally overpaid about 30,000 claims in July for Pandemic Unemployment Assistance, or PUA, a benefits program for self-employed or contract workers, said the Department of Labor and Industry, which administers the benefit. The duplicate payments totaled $280 million. There have been 28 million PUA claims in Pennsylvania totaling more than $5 billion in payments since March, according to the department.

State officials first publicly mentioned the mistake during a July 20 news conference with reporters.

“There were overpayments to a very small percentage of PUA claimants. Two percent of claimants incorrectly received two payments instead of just one,” Labor and Industry Secretary Jerry Oleksiak said at the time.

The expensive error was made by a software company that the state hired to maintain its PUA computer system, according to the department. The firm, Geographic Solutions Inc. “sent a duplicate payment file that was processed,” resulting in overpayments, said Sarah DeSantis, a department spokesperson. The company received a $35 million contract in 2017 to modernize Pennsylvania’s antiquated unemployment benefits system.

In an email Friday after this story published, a company official said the Florida-based firm provides the technology for the state’s PUA program but does not run it and referred questions to the state.

“All policy decisions including decisions on payments and eligibility are made by the Department of Labor and Industry," the company official wrote.

To recoup the extra benefits, the state is slashing weekly payments by one-third for affected workers. Some recipients, such as Ali, have had their payments cut in half.

» READ MORE: Pennsylvanians worry how they’ll pay bills as $600 in pandemic unemployment assistance expires

The Pennsylvania Labor and Industry Department “understands that the reductions in payments done to recoup the overpayments has caused some families to struggle with an uneven budget,” DeSantis said in a statement. Department officials said they have worked with Geographic Solutions to ensure that the issue doesn’t happen again.

The state wanted the overpayments to be recouped at a one-third weekly payments reduction, but the computer system was set up to claw back half by default, DeSantis said. The system correction to a one-third reduction is ongoing, so some workers have had benefit payments cut in half.

Geographic Solutions got the work handling benefits to the self-employed after the state modified a previous ongoing contract with the software provider. The hope was that this would speed up payments to jobless workers.

The firm’s original contract to overhaul the state’s overall benefits system originally called for the new system to go live in April 2019, but it was delayed to next month. On Thursday, the state said it would delay the launch again to avoid disrupting the hundreds of thousands of Pennsylvania workers relying on unemployment compensation.

» READ MORE: Pennsylvania women and people of color are bearing the brunt of the recession, report shows

Sharon Dietrich, a lawyer for the Philadelphia nonprofit Community Legal Services, said that Geographic Solution’s performance with the PUA program has her worried about the implementation of the new benefits system. The nonprofit is representing some of the affected workers.

“This is a time when the Pennsylvania budget is very tight, and for this company to have blown it that bad is amazing to me,” Dietrich said.

On its website, Geographic Solutions said it is a leading software provider for state and local workforce agencies. As of August, it said, it distributed more than $30 billion in unemployment compensation payments this year across 11 states and U.S. territories.

The company has run into trouble before. It handled unemployment systems in two other states where auditors found problems. In a 2016 report, Louisiana state auditors said the benefits system “immediately issued erroneous payments” after it went live. In Tennessee, auditors said the state “rushed implementation” of the Geographic Solutions unemployment system “in the face of known problems.”

» READ MORE: From April: The deluge of newly jobless workers is crashing the Pa. unemployment system as officials field 20,000 calls a week

In April, Geographic Solutions CEO Paul Toomey told Action News 4 in Pittsburgh that the problems were fixed in both states.

“We can assure everybody in Pennsylvania that they will have a modern, effective system,” Toomey said, according to the report.

Overpayment mistakes aren’t limited to the state’s PUA program or Pennsylvania, for that matter. Workers who contacted The Inquirer have been asked to pay back benefits in New Jersey, too. Similar issues have been reported in Florida, New York, and Virginia.

In August, a former project manager at a Philadelphia university found an alarming message asking her to repay nearly $8,000 in traditional benefits when she logged in to the state unemployment system. The woman was worried because she didn’t have the money, and unsuccessfully tried to get in touch with the help desk. She has asked not to be identified for fear of angering state officials.

» READ MORE: From July: About 90,000 Pennsylvania workers are still waiting for answers about their unemployment claims

She later learned from the state that she didn’t have to repay the money because the error was not her doing. But if she applied for unemployment in the next three years, her benefits would be cut by one-third in order to recover the money she mistakenly received.

DeSantis, the Pennsylvania spokesperson, said that overpayments do happen on occasion, due to reasons ranging from administrative errors to fraud.

Another woman working at medical schools in South Jersey got a similar message in early September that she owed more than $4,000. She had been receiving PUA benefits since the spring.

The woman tried to appeal. The only way to do that was to mail New Jersey’s Department of Labor and Workforce Development in Trenton. (The agency did not respond to multiple requests for comment.)

Then she got an email from the state two weeks later, saying, without explanation, that she no longer faced a problem. She said she is unsure what is going on but is relieved that she doesn’t appear to owe money.

Still, she’s frustrated at the entire process.

“There’s nobody you can reach, there’s nobody you can call,” she said. “It’s a nightmare.”

The Philadelphia Inquirer is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice. See all of our reporting at brokeinphilly.org.