BALTIMORE — A newly released legislative audit reveals Maryland lost hundreds upon hundreds of millions due to overpayments in unemployment claims during the COVID-19 pandemic.
The audit estimates the State's accounting errors amounted to $807.4 million.
Initially the government tried clawing back some of the money, but a November 2021 lawsuit alleged the State failed to issue a reason as to why they were issuing repayment notices to residents, while also refusing them the option to appeal.
The litigation prompted the State to freeze collection efforts until around September 2023, at which time the three-year statute of limitations had expired for most overpayments.
As result, the State lost about $760.7 million.
Some of this had to do with Maryland's transition at the time to a new BEACON application, which apparently created significant hold-ups.
Auditors blamed the Maryland Department of Labor's Division of Unemployment Insurance for not adjusting account balances that were transferred over to the BEACON system, specifically 46,986 out-of-state unemployment claims worth $493.9 million that turned out to be fraudulent.
RELATED: Md. Department of Labor completes massive COVID-19 unemployment fraud investigation
Due to this mishap, some residents received overpayment notices despite never having received any funds, leaving about $3 million unaccounted for.
Then, there were those who double-dipped, where the State paid them unemployment despite still earning a work paycheck.
These findings were reportedly flagged in previous audits, yet went uncorrected.
That's not to mention, the alleged lack of supervising within the agency which in 2024 saw a pavendors plead guilty to aggravated identity theft for their roles in manipulating the BEACON system of $3.5 million in unemployment claims.
Still, as WMAR-2 News recently reported, collections are again underway with Maryland residents receiving notices mandating they payback sometimes thousands of dollars.
In response to the audit, the State appears to place blame on the prior Larry Hogan Administration for losing out on all the money.
"Based on the prior Administration’s decisions, there were several pauses in DUI overpayment collections during the pandemic, and the issuance of overpayment notices and collections was paused entirely in January 2022 due to a lawsuit alleging a due process violation," the Division of Unemployment Insurance wrote. "Under the present leadership, MD Labor has worked expeditiously to complete the necessary back-end work to resume collection activities and issue appealable overpayment determinations for pre-moratorium overpayments with a focus on two areas: due process and system/policy alignment."
As for the repayment notices going out to the wrong people after fraud was detected by some out-of-state actors, the government says it need until at least the end of March to figure everything out.
"The approximately $3 million discrepancy appears to be associated with accounts for which debit cards may have been cancelled due to potential UI or identity fraud concerns. At this time, DUI does not have sufficient information to fully reconstruct the decisions made during that period or to determine why the amount returned by the financial institution differs from expectations, without additional review of the March 2022 transactions. Given significant staff turnover over the past several years and limitations in historical documentation, further review is required to understand the circumstances surrounding the return of funds, the identified discrepancy, and the related financial records and decisions."
The full audit can be reviewed below.
