Fault v. Non-Fault Overpayment in Pennsylvania Unemployment Compensation

In the matter of Fugh v. Unemployment Compensation Board of Review, the Pennsylvania Commonwealth Court addressed whether an unemployment claimant who had incorrectly stated that “lack of work” was the reason for her unemployment could be found to have engaged in conduct which justified a fault overpayment of benefits.

Under Pennsylvania Unemployment (UC) law, if a Claimant receives benefits to which they are ultimately determined to be ineligible for, they are found to have received an “overpayment.”  Overpayments are generally categorized as either “fault” or “non-fault” overpayments.  Section 804(a) of the UC law discussed fault overpayments and it states in part:

Any person who by reason of his fault has received any sum as compensation under this act to which he was not entitled, shall be liable to repay to the Unemployment Compensation Fund to the credit of the Compensation Account a sum equal to the amount so received by him and interest …

Section 804(b) of the UC law discusses non-fault overpayments and states in part:

Any person who other than by reason of his fault has received with respect to a benefit year any sum as compensation under this act to which he was not entitled shall not be liable to repay such sum but shall be liable to have such sum deducted from any future compensation payable to him with respect to such benefit year, or the three-year period immediately following such benefit year….

The distinction is important for the unemployment Claimant.  If Claimant is granted benefits during the initial application process and their eligibility is later reversed, there will be an overpayment.  The distinction between fault and non-fault will often times determine whether they will need to pay all or part of the benefits back.

In the Fugh case, the Claimant received benefits for which she was later determined to be ineligible.  She was also found to have a fault overpayment of benefits.  She appealed that determination to the Commonwealth Court and the Court reversed finding that the Claimant’s overpayment should not be a fault overpayment based merely on mere mistake or confusion.

If you have received a notice of fault overpayment you should speak with an experienced unemployment compensation attorney to discuss your options.