The state labor department will have to refund some unemployment claimants who were forced to repay benefits they were overpaid during the pandemic, according to a settlement agreement effective Wednesday.

The agreement ends a federal class action lawsuit filed against Maryland Department of Labor Secretary Tiffany Robinson in November 2021. Lawyers for six Marylanders, who say the agency mishandled their unemployment claims during the pandemic, filed the suit on behalf of tens of thousands who struggled to get their benefits.

The plaintiffs did not seek financial damages, but only asked that the state fix the system.

Under the agreement, the labor department must immediately implement systemic fixes, including processing the majority of claims within 21 days of receipt.

During the pandemic, some claimants reported monthslong delays after submitting an application. Others successfully receiving payments had them abruptly stopped for weeks, if not months, and received no explanation.

The agency did not concede any wrongdoing in the settlement, the terms of which will remain in place through June 2024. If the state lags in its commitments to the agreement, they could find themselves in court.

The state spending board on Wednesday unanimously approved a $300,000 payment for the plaintiffs’ attorneys’ fees.

Monisha Cherayil, who negotiated the agreement with a team of lawyers on behalf of the plaintiffs, said the intention of the lawsuit was to fix the system.

“Everyone recognized that there was a benefit to trying to resolve things through mediation because that would allow us to really roll up our sleeves and figure out why things were working the way they were, what was going wrong and what could be done better,” said Cherayil, who works for the nonprofit Public Justice Center.

Joseph Farren, chief strategy officer for the labor department, said the agency was trying to prevent false claims.

“Since the beginning of the pandemic, we have paid out $15 billion in federal unemployment benefits,” Farren wrote in an email. “Our focus is and will continue to be paying deserving claimants as quickly as possible while also protecting Maryland taxpayers from a tidal wave of fraudulent claims.”

In some cases, claimants were notified the state had paid them too much and they owed the state money, sometimes thousands of dollars. Claimants who were asked to refund unemployment benefits on or after January 1, 2020, may now get their money back.

Under the agreement, the state must retroactively apply federal overpayment waivers for eligible claimants who received overpayment notices. No action is required on the part of the claimant, according to the agreement.

“That does cover a lot of folks who were issued overpayment during the pandemic,” Cherayil said.

Under the agreement, the department must start payments or issue a denial to 92% of claimants within three weeks of receiving an application. An agency ombudsman, a position already codified in state law, will tackle those applications lingering longer than 21 days.

The agreement also says insurance benefits cannot be suspended without cause for more than 14 days. If the agency finds a claimant is no longer eligible, they can investigate, but they must either issue a denial or resume payments at the end of the 14-day period.

While the settlement lifts a moratorium on overpayment collections that had been in place since negotiations began, new stipulations force the department to investigate and alert claimants of potential overpayments in advance of sending collection notices. Going forward, the agreement requires the department to allow claimants to challenge those determinations through the labor agency’s appeals process, something that was previously not allowed.

The Office of the Attorney General, which participated in negotiations on behalf of the state, said in a statement they “are satisfied with the settlement and pleased that the matter has been resolved.”

brenda.wintrode@thebaltimorebanner.com