Bamboozled: State’s error persists

BB brandingLike a snail or molasses or Parkway traffic on a summer Sunday — you choose the simile — bureaucracy moves slowly. Awfully slowly.

Even when a wrong is righted, it often takes an astonishing amount of time for a bureaucracy to get the remedies into place.

And sometimes those remedies don’t really make all that much sense.

That kind of sweeping uncertainty is at the heart of what’s happening to Ken Caputo, a former New Jerseyan once profiled in this space because the state told him he owed $17,000 in overpaid unemployment benefits.

Before we get to Caputo, please understand, dear readers, if you’ve received the dreaded notice that you owe money back to the state, there is probably nothing that Bamboozled can do for you.

The law is the law is the law.

Yes, the law says that even if the overpayment was innocent on your part, or even if it was a mistake on the part of the state, you’re responsible for the repayment. Please, please, go through the state’s official appeals procedure, which is detailed on the statement that told you of the overpayment. Unless there’s something wildly unusual about your case, we probably can’t help.

Back to Caputo.

63014He first became unemployed in 2007 when he lived in Edison. He filed a claim for unemployment in New Jersey that summer. That fall, Caputo moved to South Carolina.

He informed New Jersey about the move, and the state told him his unemployment benefits would continue to be paid by New Jersey, Caputo said.

Caputo said he continued looking for work, but he could only find a part-time gig with a home improvement retailer that paid $8 per hour. That was in 2008.

He said he again called New Jersey when he started that part-time job. The state told him he would continue to collect benefits from the state as long as he reported weekly how many hours he worked, he said. So he did.

By July 2008, still without full-time work, Caputo completed an application for extended unemployment benefits.

At that time, he said, New Jersey told him he was still eligible. He said he followed up with the state twice more to be sure, and twice more, the reps said he was still eligible.

On April 22, 2010, he received a notice saying he had exhausted his benefits. When he called New Jersey to confirm, he said the rep asked if he was ever instructed to file with South Carolina. He said he wasn’t.

“She again said, ‘That’s okay. It’s not your fault. Someone here (the State of New Jersey) should have taken some action,’ ” Caputo said at the time.

And shortly thereafter, Caputo received the notice that said he owed $17,000 in overpaid benefits.

The next two years brought a string of unsuccessful appeals, so he turned to Bamboozled.

In April 2013, we reviewed his paperwork and asked the Department of Labor and Workforce Development to take another look at his case.

Caputo appeared to have properly notified New Jersey in good faith every step of the way, so it seemed to us that something wasn’t right. If Caputo shouldn’t have received benefits from the state, a red flag — or several — should have gone up given all of Caputo’s inquiries.

In the end, the Labor Department called the case “agency error,” which meant someone internally made a mistake and the system should have picked up the overpayments. As long as Caputo never again filed in New Jersey, the state said it wouldn’t actively pursue him for the money.

But that’s not what’s appears to have happened.

Caputo, who still works part-time for the home improvement retailer, said after his story ran, things were quiet on the overpayment front.

“During these periods I foolishly relaxed and thought it was settled and the state of New Jersey was not going to pursue this incredible hardship for me and my family,” Caputo said.

But in the summer of 2013, Caputo said he was contacted by South Carolina to come in to do some unemployment paperwork.

“They said New Jersey asked them to have me apply for benefits for the years in question, years later,” he said. “I felt funny doing this but I didn’t want to rock the boat.”

Caputo said at the unemployment office, he asked the South Carolina officials to explain.

“They told me they were only complying with what New Jersey asked them to do. They shrugged their shoulders,” Caputo said. “It all made no sense because I was not actually going for unemployment benefits.”

For about nine months after that, Caputo said he heard nothing, so he again thought he could put the huge bill behind him.

Then he received a notice from South Carolina, dated March 10, that he owed $21,000 in overpayments.

On the same date, South Carolina sent Caputo a $200 check for benefits — a check that Caputo still hasn’t cashed, he said, because he never asked for payments from that state.

Around the same time, Caputo said, New Jersey sent him yet another notice that he owed $17,000.

“After at least a week of phone calls with the South Carolina overpayment division, an official told me New Jersey asked them to send that notice out for them,” he said. “I explained I haven’t collected a dime from South Carolina. How could I possibly owe them $21,000?”

The rep said South Carolina sent the notice as a courtesy to New Jersey, and they wouldn’t come after him, Caputo said.

South Carolina, in fact, handles overpayment cases differently from New Jersey. The state garnishes future benefits to get back any money it overpaid. It doesn’t send a bill.

“I believe I did nothing dishonest. Every step of the way I complied with the law and actually asked at least three times if the claim should be shifted to South Carolina,” he said. “Along with everything else, my wife and I are helping raise two minor grandkids that live with us. This would be a terrible financial burden for something that is the fault of New Jersey and not me.”

We reached out to New Jersey to see what gives.

While we waited for an answer, Caputo received yet another notice from New Jersey.

This one said he owed $15,931 in overpaid benefits.

“This is why they make you feel like you are a criminal,” he said.


The Labor Department re-examined Caputo’s case, and it confirmed Caputo’s case has been listed as an “agency error” since we first wrote about it.

“In such cases, an individual may continue to receive notices of the debt, which does not disappear,” spokesman Brian Murray said.

In essence, you can’t shove the toothpaste back in the tube.

Newer fraud detection initiatives and reciprocal measures with other states and the federal government are probably why the New Jersey notices re-started. And that’s probably why Caputo started getting notices from South Carolina, too.

Indeed, both federal and state governments have ramped up efforts to reclaim fraudulently or wrongly collected benefits in recent years.

Since New Jersey implemented new anti-fraud measures in 2011, it has saved $448 million, Labor Department data showed.

About $48 million of that came specifically from wrongly collected benefits that were recovered by the state through the seizure of tax refunds since June 2013.

So even though New Jersey says it won’t actively pursue Caputo, he needs to be aware that other agencies could try to collect.

For example, if Caputo is ever due a federal tax refund, we wouldn’t be surprised if it was taken toward this “agency error” debt. And if he ever files for unemployment in another state, that state could garnish his benefits, even though New Jersey has filed no liens or judgments against him.

Caputo said he has no intention of filing for unemployment anywhere in the future. And while he says he’s relieved the state doesn’t plan to pursue him for the money, he finds it strange that the notices will keep on coming.

“I can’t understand for the life of me why they can’t turn off the spigot if they decided it’s an agency error,” Caputo said. “It’s an uneasy feeling but I’m going to look at this as a closed chapter.”

“I’ll just have to live with getting these notices,” he said.