Overpayments are a rampant problem in the unemployment insurance system, CNNMoney reported.

The federal government and states overpaid an estimated $14 billion in benefits in fiscal 2011, or roughly 11 percent of all the jobless benefits paid out, according to reports from the U.S. Labor Department.

Of the states, Indiana was the worst offender, making more improper payments than correct ones.

Now, the U.S. Department of Labor and the states are in the midst of a massive effort to try to recoup some of their lost funds and avoid future overpayments.

The vast majority of unemployment benefits do go to people in need. In 2010 alone, unemployment checks helped keep 3.2 million Americans out of poverty, according to the U.S. Census Bureau.

But of the overpaid funds, most end up in the hands of three types of people: those who aren’t actively searching for a job, those who were fired or quit voluntarily, and those who continue to file claims even though they’ve returned to work. Any of those circumstances would make a person ineligible for benefits.

The overpayment typically results from an administrative error made either by the government, the employer, the worker or a combination of the three.

In much rarer situations, people deliberately defraud the system, using fake documents or identities. Common scams involve prison inmates, illegal immigrants or even the deceased, CNNMoney said.