Not long ago, I wrote a blog about non-fault overpayments of Pennsylvania Unemployment Compensation benefits. Now, I want to address fault overpayments. As its name implies, a fault overpayment is a determination that you received unemployment compensation benefits to which you were not entitled and that you received such payments due to some "fault" on your part.
While there is no definition in the statute as to what specifically is meant by the term "fault," court cases have provided some direction on this point. The courts have maintained, fairly consistently, that "fault" suggests an act...
..."to which blame, censure, impropriety, shortcoming, or culpability attaches." Other courts in Pennsylvania have added that fault includes conduct that is designed to intentionally mislead the Department of Labor and Industry and the Unemployment Compensation office.
In order for there to be a fault overpayment, there also must be a finding that the person who was overpaid had a particular state of mind. A knowing or intentional act to mislead is necessary. What this means then, is that an unintentional act is insufficient. Also, and quite importantly, a person who receives benefits in error, but who legitimately believed they were entitled to those benefits, will generally not be held to a fault overpayment. So, simply being found to be ineligible for benefits after being paid benefits, is not a fault overpayment without some intent to mislead or deceive.
Unlike a non-fault overpayment, where there is a 3 year limit during which the Department of Labor can seek repayment (i.e., "recoupment"), with a fault overpayment, the Department can try obtain repayment for a period of 10 years. The Department can essentially seek repayment during this 10 year period using any legal means - including an IRS intercept. So, if you are the subject of a fault overpayment determination and you are due a refund from the IRS, your refund may be intercepted. Of course, the Department can seek repayment from future unemployment compensation benefits as well. In addition, penalty weeks can also be assessed.
If you find yourself facing a fault or non-fault determination, you should consider an appeal. If you have questions about any of this, please contact the Pennsylvania Unemployment Compensation lawyers at Menges & McLaughlin for help today.