Problems plaguing Ariz. jobless claims
Months into crisis, many are still without benefits
After working 25 years as a nurse, Ozella Davis never imagined a situation where she would have no home of her own, no car to drive, no job to support herself, and no money in her bank account when she tried to buy groceries.
That’s the position she found herself in a month ago after the Arizona Department of Economic Security closed the bank account it opened to pay her unemployment benefits, along with 28,000 others suspected of fraud. DES later confirmed at least 3,800 of those were legitimate accounts, including hers.
Closing claimants’ bank accounts is among a series of glitches, mixups, delays, service issues and other problems that have plagued Arizona’s unemployment system since layoffs from COVID-19 sent an avalanche of applicants to DES in March.
The failures have been financially crippling for thousands of Arizonans who were forced to turn to the safety net. As people like Davis will attest.
Despite hiring 900 workers at the department to handle the workload, many of the issues persist five months into the pandemic, and new ones seem to arise almost weekly.
The department still has a backlog of 37,000 applications to be reviewed, while many more applicants await word on why their payments have stopped without explanation.
DES last week released payments for 90,000 applicants, many of them owed several weeks of benefits. The average payment was more than $8,000 as the agency distributed $730 million in benefits.
Davis, 53, got married in late 2019 after several years in a long-term relationship with her boyfriend, who was doing contract work in Louisiana at the time.
When her contract as a surgical nurse in Flagstaff ended in January, she and her husband decided to take some time and visit family around the country before settling down together. Then the pandemic hit.
“I never thought we would be part of having to ask anyone for help,” she said. “But in this day and age, nothing is a given anymore.”
She now is living in Indianapolis with friends, where the couple had traveled to visit family and found themselves in March when the economy shut down. Her car and belongings still are in storage in Arizona.
“I never thought the state would turn its back on me after I’ve given my everything for them.”
Ozella Davis
Out-of-work nurse struggling to receive unemployment benefits from the state
Despite holding a nursing license in multiple states, she’s been unable to get licensed in Indiana because of complications from the pandemic, and the elective surgeries she specializes in are in low demand for now anyhow.
Health care was one of the areas where Arizona lost the most jobs because of the pandemic, after tourism and service positions. Job cuts came because of a temporary moratorium on elective surgeries, and also because people largely put off routine treatments. The industry has rebounded but still employs fewer people than it did a year ago in the state.
At first, she and her husband didn’t panic.
“We thought, we are just going to have to use our savings and then everything will be back in order,” she said. “Well, we wiped our savings out.”
Applying for unemployment was difficult, she said.
“There’s a stigma,” she said.
But she needed the money, and the weekly benefits she got from the Pandemic Unemployment Assistance program helped her pay for necessities until she and her husband could work again.
Unemployment benefits and PUA are distributed by the state where workers have the most recent earnings history, so hers came from Arizona.
There is no rule that a recipient must remain in the state that is paying their benefits, because the benefits were earned while the worker was on the job.
When Davis was trying to buy groceries in early July, her Bank of America debit card issued by the state was rejected, and she soon learned that more than $1,000 in the account was gone. She’s also missed five subsequent weeks of benefits trying to sort out the issue, she said.
The Arizona Republic notified DES on Aug. 7 of Davis’ situation and provided the state agency with her contact information. DES had announced before that it was repaying the legitimate accounts that had been closed in the anti-fraud sweep of bank accounts.
But Davis said that even though DES emailed her to acknowledge the mistake in closing her account, she only got a single check for $240 and still is owed nearly $4,000 in benefits.
“I never thought the state would turn its back on me after I’ve given my everything for them,” Davis said. “I have done everything, and I am about to be homeless.”
On Aug. 13, after weeks of trying to reach someone — and The Republic twice contacting DES on her behalf — Davis said she got a call from a DES worker telling her he had her check on his desk. But she still didn’t have the money in hand.
DES inundated with claims
The pandemic caught the state’s unemployment system off guard. The department was getting no more than 4,000 applications a week and had fewer than 20,000 people at a time getting benefits, with some people coming on and off each week.
DES had 13 employees who worked answering phones. Its current computer system went online in the late 1980s to process claims.
The department didn’t have a director because the last one resigned in the fall, and Gov. Doug Ducey had not appointed a new one.
When businesses shut down in March, Dr. Cara Christ, who was in charge of leading the state’s response to the coronavirus pandemic, was responsible for running DES, which was seeing an unprecedented number of Arizonans seeking help.
The week of March 21, nearly 30,000 people applied for benefits, shattering the weekly record of 11,178 new applications the week of July 4, 2009, after the Great Recession. The next week, another 89,000 applications came in. Every week since then has topped that 2009 record.
And there were problems. The website for applicants crashed. The phone lines got jammed. People showed up at DES offices, but nobody was there to help them out. And fraudulent applications came in along with legitimate claims for assistance.
Not only were Arizonans turning to the agency in historic numbers, but DES had to implement changes Ducey issued through executive order, then figure out how to distribute the additional $600 a week Congress directed states to pay in addition to regular benefits, which max out at $240 a week in Arizona. (That $600 supplement ended in late July.)
Then the state had to launch the PUA program Congress approved to pay benefits to people who don’t normally qualify for unemployment insurance, including contract workers and people who were self-employed.
Arizona was the 38th state to get the PUA program up and running when it launched in May.
The PUA system has paid more than twice as many Arizonans as regular unemployment, supplementing the income of Uber drivers, real estate agents, contractors and others who have been put out of work.
More than 1.1 million people have been paid by unemployment or PUA in Arizona during the pandemic.
The number of weekly applications has dropped substantially since hitting a high in early April, but DES staff still can’t answer all the calls, with applicants either reporting they can’t get through or they only can reach a person after dozens of attempts.
DES reports it is averaging
11,000 calls per day.
Ducey brought a former state department director out of retirement to run the agency for 75 days, paying $95,000 for those services, then named a DES deputy as the agency director.
Since being named director, Michael Wisehart has not granted an interview to The Republic, but the agency says it is working hard to get people their benefits.
“The Department has been, and continues to process claims seven days a week in order to help eligible individuals receive payment,” Communications Director Tasya Peterson said via email.
“Director Wisehart leads by example and is deeply involved in all facets of the agency, which obviously include (unemployment) and fraud prevention. The majority of his time is spent leading our agency and meeting with our teams to determine the best ways forward on behalf of those we serve as well as our staff who are working around the clock to provide service to Arizonans.”
Ducey has repeatedly told reporters at his news briefings that he is providing the department with resources to take care of people. He usually cites the total dollars in jobless benefits distributed by DES and the phone call volume, without addressing the particular problems that applicants encounter.
On Aug. 13, Ducey said he wants DES to close the backlog of unread applications “as quickly as possible” and to clear up fraud investigations so people whose payments have been delayed get their benefits.
“We’ve got all hands on deck to do that as soon as possible,” Ducey said. “We are bringing on every resource possible. We are hiring people in which to do it.”
DES blames fraud for delays
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The agency has blamed many of the struggles not only on the volume of work but on rampant fraud.
The agency gets tips on fraud from people who, for example, receive a debit card in the mail but never applied for benefits.
The agency has gotten more than 25,000 leads on fraud and confirmed more than 5,000 cases of attempted fraud, not including the 28,000 closed bank accounts, the vast majority of which the agency says were fraudulent.
But DES efforts to combat fraud have delayed benefits for legitimate claimants.
For example, the accounts that were closed were all from applicants who were out of state. While that can signal a fraud attempt, legitimate claimants such as Davis are allowed to move out of state.
Other states are dealing with fraud as well but chose to handle things differently. Some, for example, simply froze bank accounts suspected of fraud rather than wipe them out, so people could access the funds once their accounts were verified.
DES officials also said they flag accounts where someone has filed for several weeks of benefits all at once.
“In order to combat this, DES began holding large payments of benefits until the claims can be verified as eligible,” Peterson said.
DES says fraudsters often file several weekly claims at once, but that also is what some legitimate claimants will do if they hold out on seeking public assistance until they exhaust their savings or realize they are not able to return to work as planned.
This leaves many applicants confused because their online account at DES will keep changing the pay date, giving then false hope the money is on its way, only to see the date keep getting pushed back until DES validates their claim.
DES also confirmed that one trigger that can flag an account for fraud is if an applicant signs in to file a weekly claim from a computer with an out-of-state IP address.
That is what happened
Gessner, 37, of Oro Valley.
The film and television producer and writer was collecting benefits but said his payments stopped after he visited relatives in California and filed his claim from that state.
Now his online account simply says his payments are “in process.”
Like many other applicants, Gessner followed the directions of DES to upload a photo of himself holding his state-is
to
Chris
sued identification to his account, but still nothing happened.
Until an actual person at DES clears the account, he won’t be paid, and he continues to miss weekly benefits.
He’s missed eight weeks of benefits and counting. “I provided my passport, Social Security card, Arizona ID, picture of me holding my ID, copy of my birth certificate,” he said. “I don’t know how in the hell taxpaying citizens like myself can’t even get an answer on whether they believe I am who I claim to be.”
Gessner said that, being desperate for income, he called the Governor’s Office to seek help.
“They start arguing with me,” he said. “They start telling me how much money has been lost to fraud. I just think, they are not dealing with this. If you can prove your identify, you should get your money.”
His claim is being reviewed by federal investigators, Gessner said.
While DES declines to comment on specific applicants, spokesman Brett Bezio said in some cases federal investigators are involved.
“DES is working with the U.S. Secret Service and other law enforcement personnel in the investigation of potential (unemployment) benefit fraud,” Bezio said via email. “We are collaborating with these organizations to continuously vet methods and tools for the detection and prevention of fraud. DES is also leveraging partnerships with financial institutions and technology companies to further identify trends of potentially fraudulent activity.”
The bad news for people with unemployment claims that get flagged for fraud is that, while they can continue to file weekly claims, they won’t get paid until DES verifies the account.
“Cases that fit these identified patterns will require further review prior to the release of benefits,” Bezio said.
Peterson said the DES director “understands the need for claimants to receive unemployment assistance, but also the responsibility of upholding the integrity of taxpayer funds so they are distributed to those who need them during this difficult time.”
Lawmaker says agency is underfunded
One Democratic state lawmaker said Arizona’s struggles shouldn’t be blamed on the hardworking people at DES as much as they should fall on lawmakers and state leaders who habitually underfund the agency, making it ill-prepared to handle emergencies.
“It is a hot mess,” said Rep. Mitzi Epstein, D-Tempe, a computer analyst who is a member of the Commerce and Ways and Means committees.
She said DES has let Arizonans down in their time of crisis.
“They need that bridge from one job to the next job,” she said. “If we let them fall into the river, how are we ever supposed to have a rebound from this?”
She said the people working at DES have performed well given the antiquated computer system and lack of an emergency plan heading into the pandemic.
“The folks at DES, they are working so hard, and they are so dedicated to helping people,” she said. “Every time another problem comes up, they come up with a solution for it. And there are a lot of problems that keep happening.”
She lamented that other states have action plans for disasters that can send thousands of people to the unemployment system, while Arizona did not.
“I guess we planned that we would never have a flood or a hurricane,” she said. “If we had, we would see our computer systems and our whole system is far too dependent on an individual person with eyeballs looking at and analyzing these claims.”