Wolf admin sat on 2017 probe of unemployment error but denies ‘cover-up’

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HARRISBURG — Pennsylvania’s top labor official said Thursday there was never an attempt within her department to deliberately conceal an error that resulted in thousands of people being overcharged millions of dollars in interest on payments they owed the agency.

The Department of Labor and Industry identified the error five years ago but did not tell the public until a Spotlight PA inquiry about the issue last week. But department head Jennifer Berrier wrote in an email to the chairs of the state legislative committees that oversee labor issues that “there is no cover-up.”

Nonetheless, the agency has refused to answer why it waited to publicly acknowledge the problem until Spotlight PA independently learned of the issue and asked the department for formal comment.

In the press release last Friday, the agency admitted that it learned in late 2016 it had erroneously used an inflated interest rate for a decade when calculating repayments owed by people who had received unemployment benefits for which they did not qualify. The announcement said the error affected about 250,000 people, necessitating $14 million in refunds.

Gov. Tom Wolf’s office said he only learned about the problem after the announcement. In her email to legislators, Berrier said she became aware of the error earlier this year after Spotlight PA filed a public-records request.

The department at the time refused to make people who could explain what happened available for interviews.

What is increasingly clear is that once the error was discovered, there was a communication breakdown.

The Pennsylvania Office of Inspector General was alerted to the problem in mid-2017, when an unnamed state worker complained about it, according to state officials. The office investigated the matter, determining within a few months that it was a result of “human error” and lack of oversight.

Inspector General spokesperson Jonathan Hendrickson said his office at the time sent a one-page “investigative letter” with its findings to the Labor and Industry Department’s then-acting secretary. Wolf’s Office of General Counsel was copied on it, Hendrickson said.

But unlike with other inquiries, the Office of Inspector General did not make the findings of this investigation public until pressed to do so by Spotlight PA earlier this week.

When asked why, Hendrickson would say only that the office shields investigative letters and reports that involve personnel issues or otherwise confidential material. He did not respond to questions about why the office believed the Labor and Industry error fell in those protected categories.

In emails to Spotlight PA this week, Wolf spokesperson Elizabeth Rementer said the governor’s office does “not have records” of the Inspector General’s letter. But she also said that the governor’s office was notified in early 2017 of “a potential issue at the Department of Labor and Industry,” and given some details about the error.

She too did not address why the governor’s office did not push to make the mistake public. Like Hendrickson, she cited the policy of not making Inspector General findings public when they contain personnel or other confidential or privileged information, without addressing how the Labor and Industry mistake qualified as confidential.

Former Labor and Industry employees who were tasked with addressing the problem once it was discovered told Spotlight PA that they were directed to keep it secret.

Labor and Industry officials have denied that assertion. Spokesperson Penny Ickes said in emails this week that agency officials moved swiftly to assess the problem, but were unable to identify a quick solution.

She also said the pandemic forced the department to prioritize the unprecedented spike in claims and payments — though the first cases of coronavirus were detected nearly four years after the problem was discovered.

Ickes has said that the people impacted are those who “intentionally misled the department to receive benefits to which they are not eligible,” but she declined several requests to explain how the department made that determination.

When asked about people who may have made honest mistakes on their forms, Ickes conceded that “every claimant situation is fact-specific and it depends upon the claimant’s state of mind, what fact-finding discovers, and the evidence available to the department.

People who intentionally provide false information, or withhold information to obtain or increase their benefits, can be prosecuted, but Ickes could not say how many people who were overcharged interest had been charged with a crime.

In her email to legislators, Berrier said the department expects to have a system in place by mid-September to inform those affected that they are owed refunds.

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