Thousands of Oregonians are dealing with having to pay back some unemployment benefits the state now says they shouldn’t have received. The Oregon Law Center filed a lawsuit in 2022 arguing that the Oregon Employment Department is violating the due process clause of the constitution. The case is ongoing and represents the confusion around paying back benefits. Meanwhile the agency says it was overwhelmed by requests during the pandemic, and it’s possible that more than $5.5 million could be waived in overpaid benefits. Dianne Lugo is a reporter for the Statesman Journal and has covered these issues. She joins us with more on her reporting.
Note: This transcript was computer generated and edited by a volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. We start today with the Oregon Employment Department. Early on in the pandemic when a historic number of Oregonians filed unemployment claims, the big story was that the department was overwhelmed by requests for help. But in the years that followed a different problem cropped up: the state gave out millions of dollars more than people had qualified for. So it began asking people to pay that money back. Last year, the Oregon Law Center filed suit on behalf of some of those people saying that the state had violated their rights in the way it went about trying to reclaim that money. Dianne Lugo has been writing about this case for the Statesman Journal and she joins us now. Welcome to the show.
Dianne Lugo: Thank you.
Miller: Thanks for joining us. Can you remind us what happened at the employment department at the beginning of the pandemic?
Lugo: We know that people were waiting, call times [were] hours long, and at the peak of the pandemic, there were hundreds of thousands of claims that suddenly influxed the department. And they were overwhelmed with these thousands of claims coming in per week during the pandemic.
Miller: And then eventually the department sorted through that huge backlog, they hired more people. What were the challenges that led people to get more money than they were supposed to? Why did this happen?
Lugo: According to the Oregon Employment Department, a lot of the blame for this is just because they had new workers and with less training than was normal. And they also had new guidelines. There was new federal unemployment benefits that were available and pandemic related programs that had ever-evolving guidelines. And that’s why they say that it took some time to figure out exactly who was actually eligible, having to make redeterminations of eligibility. And that’s why they say that people were getting these notices months later that after re-evaluating, they weren’t actually entitled to that money.
Miller: How many people are we talking about? How many people has the employment department identified that have been overpaid?
Lugo: So the exact number isn’t quite clear. I did ask the Oregon Employment Department for updated numbers and they said that those records weren’t available at the time. But in the motion for this lawsuit, the plaintiffs say that there was a minimum of 61,000 overpayments that became final between January of 2020 and May of 2023. And what the department did tell me was that there was at least 4,400 people who had been found at fault for their overpayment system who may still be eligible for a waiver that was established by the legislature to forgive these payments. And they say that the waiver has waived $4.5 million in overpayments from the pandemic.
Miller: Who brought this suit last year?
Lugo: So this lawsuit was filed by the Oregon Law Center on behalf of six Oregonians who were paid unemployment benefits during the pandemic and then were asked to pay that back. They are saying that the system is just so disjointed and confusing that it’s actually unconstitutional, denying people the right to kind of contest these overpayments fairly.
Miller: So this is an important point. If I understand correctly, they’re not arguing that they should have received all the money that they did receive. They’re saying that the process by which the state has gone after them and said “you have to give us this money back,” that that process has been unconstitutional. That’s right?
Lugo: That’s correct. And so what they’re kind of explaining is the system that the Oregon Employment Department has been using for these overpayments, it’s a two notice system. And so you’ll get a letter in the mail if you’re someone that’s affected that’s telling you the first notice that you weren’t eligible, or that you weren’t eligible for as much money as you received. And they’re arguing that the language in there doesn’t really make clear, in that first notice, the consequences if you don’t apply for a hearing or if you don’t contest it. And then you get a second notice, either you did request a hearing and the decision remains, or you kind of waived your right to a hearing, and the second notice goes out that tells you you were overpaid and now you can have a second hearing, but it won’t be about the eligibility rather, it will just be contesting how much and when you’ll have to [repay]. And that’s what they’re arguing, is that people aren’t gathering the consequences enough using this two notice system.
Miller: Is this going to boil down to what a reasonable person can expect in terms of bureaucratic language?
Lugo: That is the argument that the Oregon Law Center is making, that a reasonable person might not take notice of that first letter, or that they’re not being guided enough, that they don’t realize the severity of what can happen with that first notice. And as you mentioned, this is not a lawsuit asking for the six plaintiffs to be paid back or to get their overpayments forgiven. They’re asking for systemic changes, systemic relief. And that’s what they’re hoping for, is that there’s gonna be change going forward.
Miller: How has the state responded to these allegations that their system is, to use the language from the plaintiffs, “impenetrable and fragmented?”
Lugo: They deny that. They acknowledge, in their defense, that these were very specific cases during the pandemic, and that’s their argument of why this should be dismissed. They argue that the factors that led to these alleged harms no longer exist, and so that the risk going forward is not going to happen. And they also argue that they are months away from a new computer system, that they are going to change notices moving forward. And they’re arguing that these six plaintiffs had unique situations and that it’s not a systemic issue, it’s not a summary of how the system works.
Miller: Well, this was actually a question that came up for me as I was reading your reporting. Because you wrote what said there, that the employment department plans to, if I understand correctly, streamline their notice process this coming March, only four months away. Are they in effect going to already be doing what the plaintiffs are asking for?
Lugo: Yes, that’s what they say, that this is kind of an upcoming change, they’re already aware and they’re already going to be evolving. But the plaintiff’s argument is that overpayment decisions are still happening right now related to this, and that the system is still being used. And that’s why they’re asking for an immediate pause on any overpayment decisions and overpayments until they implement that system.
Miller: Because right now people are still getting, say, the first notice of the current two notice system, it’s still happening.
Lugo: Yes, exactly.
Miller: You wrote about a woman who is not a plaintiff, not one of the six plaintiffs in this case, but has a really compelling story. Can you tell us about Rowan Hayes?
Lugo: Sure. So as you mentioned, I spoke with Rowan Hayes, and she’s a 25 year old woman who lives in Clackamas, and she’s one of the people who has now been determined to owe back money to the Oregon Employment Department. She was a swim instructor when the pandemic began, and pools were shut down or restricted, and she found herself in need of a little bit of support and filed regular unemployment benefits that she received for about eight months, when she received a notice that the department had determined she was not actually eligible to those. And that was in December of 2020. She requested a hearing contesting the decision, and that sparked a few more months when she connected with what was supposed to be a specialist at the department who gave her varied advice that she says that she really regrets following.
Miller: As I understand it, eventually this specialist said “you’re going to be fine, sign up for this different version of benefits, and we will take care of it on our end.” I’m paraphrasing, but it seems like she had official word from somebody at the employment department that everything would be all right. Then what happened?
Lugo: She shared the emails that she exchanged with the specialist, and they span from December of 2020 through March of 2021. And as you said, she’s told in that first email to immediately sign up for a different kind of unemployment benefit, and that if she does so and withdraws her request for hearing, on their end they’ll offset each other and that she really doesn’t have to do anything on her end, that everything will be done through the network. And she follows this advice. And then all of a sudden, in February of 2022 which is nearly two years after she was originally approved for benefits, she received a letter saying that the department determined she was overpaid for various forms of unemployment, and she has 15 days to pay them back or request a hearing.
The hearing does not go the way she hoped, and then she loses an appeal, and she’s also denied that waiver to forgive the overpayments, because the department determines she “misreported information.” And she told me that under her current payment plan, she’s going to be paying back the department until 2066, which is nearly 50 years after she first received benefits.
Miller: So having somebody at the agency give her advice that she then takes, that’s not an adequate defense when it comes to then later arguing with the agency?
Lugo: It appears not. As I reported, she shared the email, and during the hearing from the specialist who was asked to testify, she said that she was following guidance that she received at the time, and she apologizes for “any miscommunication or misinformation” and the impact that it had on Rowan. But the department determined that she did not fit the exact guidelines for forgiveness of any of the overpayment and that she didn’t qualify for this waiver.
Miller: Where does the case from the Oregon Law Center and the six plaintiffs stand right now?
Lugo: They had their first hearing on November 30th, and both of them have made a motion for summary judgment, which means they’re asking the judge in Multnomah County Circuit Court to make the determination whether either of their arguments is correct. They both agreed not to send the case to trial. If it had, that would have been on January 22nd that the trial would have started, but because they both kind of agreed not to do that, the judge has said that we’ll likely have a decision by that date. So we should know a little bit more coming into this new year.
Miller: Dianne, thanks very much.
Lugo: Thank you.
Miller: Dianne Lugo reports on state government and equity issues for the Statesman Journal.
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