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‘Systemic incompetence’ and ‘fraud fallacy’ part of broken system at DETR, says former adjudicator

LAS VEGAS (KTNV) — Tens of thousands of desperate, out of work Nevadans are counting on a judge to force the state’s unemployment division to pay benefits to people who haven’t gotten any CARES Act money yet.

The question so many people have is “What’s taking so long?”

The state has offered limited explanation… usually citing fraud and strict guidelines.

But a former Department of Employment, Training, and Rehabilitation adjudicator says “Don’t believe it,” because, she claims, the real fraud is coming from the agency itself.

“Broken and sad.” That’s how former DETR adjudicator Laura Feher describes Nevada’s unemployment system.

And those who count on it know just what she means.

“I think it’s disgusting that taxpayers, people who are the backbone of the economy, have to go through those great lengths just to receive what is allotted to them,” said PUA claimant Tabitha Asare.

Fellow PUA claimant Scott Howard added, “And I just want some transparency and accountability.”

Feher says to not count on that either. “It’s just corrupted,” she said.

Feher retired from Nevada’s DETR in 2019, after 10 years as an adjudicator.

“After working for unemployment for so many years, I always said ‘If it’s logical or reasonable, unemployment is not going to do it.’ And it’s unfortunate, but it’s true.”

She says the current situation with Pandemic Unemployment Assistance, or PUA, is evidence of that.

“It’s even worse than the regular unemployment system. It’s completely messed up. Some of the information that they ask for does not apply to self-employed or gig workers! And it’s extremely difficult to get through it,” Feher said.

Tens of thousands of self-employed and gig workers have been waiting for months with no money, even after being found eligible for benefits.

The current class-action lawsuit seeks to force a fix, but Feher and Steve Zuelke, another former insider we spoke to, both say DETR’s defenses to the lawsuit don’t pass the smell test.

“I think there have been some excuses,” Zuelke said.

Class-action lawsuit seeks to force Nevada’s unemployment office to do its job

Feher added, “They’re saying that it’s taking longer because they’re afraid of fraud, which is such a fallacy! Number one, there’s always been fraud. Okay? And there’s a whole department that works fraud.”

13 Investigates found some of DETR’s problems may be self-inflicted – caused by software glitches they wrongly blame on claimants.

For example, DETR cited a fraud concern after a sudden uptick in new claims, which came after a system glitch that wiped out people’s claim history, forcing them to reapply.

“You have used the words ‘systemic incompetence’ to describe DETR. You believe that that’s the case?” Darcy Spears asked.

“Oh, I do. Absolutely,” Feher responded.

After asking about the “new claim” issue for weeks, 13 Investigates got a response from DETR acknowledging it was their error.

Their statement says, “We worked with the vendor in investigating and addressing this matter. This issue was not universal to all users” and was resolved “with no loss of claimant information.”

“They change the rules as they please, to please them,” Feher said.

Another potential fraud fallacy? DETR told the court that claims backdated to February were a sign of potential fraud, but the agency itself gave eligible people the option to backdate to the week of Feb. 2. Still, they froze the claims.

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“I don’t know what kind of fraud they’re talking about; I just think it’s an excuse not to pay people,” said Feher.

Another DETR red flag is “Out of area IP addresses.” But according to the lawsuit, DETR fails to acknowledge a common network feature that inserts fictitious IP addresses for security reasons.

“It’s a typical bureaucratic – they try to make things so that they think they’re making themselves look good at the expense of the people who they’re supposed to be trying to help,” said Feher.

Findings report in class-action lawsuit against DETR pushed back to July 17

DETR continues to cite fraud but won’t say how many fraud cases there really are or how much money has actually been lost to fraud.

They say they can’t comment “In order to maintain the integrity of these investigations.”

Feher points out that “Most of the people who commit fraud are very, very savvy on how to do it. You’re dealing with a situation right now where you have people who are not really savvy, who are just trying to help their families get some assistance that they were told they’d be able to get!”

The lawsuit says, “DETR’s method of operation is ‘everyone is guilty until proven innocent.’ Meanwhile, people lose their homes, families, sanity, self-worth, and become an even bigger drain on Nevada’s economic recovery.”

Feher said DETR had the chance to get ahead of the game when they spent $40 million on a computer system upgrade several years ago.

“So what did we get for that $40 million?” Spears asked.

“We got a terrible system,” Feher answered. One she calls confusing, convoluted and full of deliberate delays designed to make claimants give up.

“I think it’s definitely set up to create roadblocks and to make it easier to deny,” she said.

The lawsuit echoes that, saying DETR “Uses a systematic campaign to deny benefits rather than approve them.”

“They want to just keep as much money as they can, let’s face it,” said Feher. “It has to do with funding. That’s all they care about. And they’re keeping their jobs, of course.”

Feher says the one person who can make a difference is also failing Nevada families.

“If someone from the governor’s office calls someone from unemployment, that’s when something happens,” Feher recalls, saying she saw it time and again during her decade at DETR.

But Gov. Steve Sisolak continues to defend DETR, saying they’re overwhelmed and doing the best they can.

Feher believes he’s trying to save face after failed appointees at the agency’s helm.

“People are suffering! If you really wanted to get something done, why didn’t they hire someone who actually knew something about unemployment?” Feher said.

She and Steve Zuelke say lack of experienced leadership has contributed to the current crisis.

“Not only in the face of a lawsuit but in the face of humanity, in the face of tens of thousands of people who are losing everything because of system inefficiencies and lack of steady leadership, you’d think that someone would come in and say ‘We need to pull out all the stops,'” said Zuelke.

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Feher has a simple message for her former employer:

“Get your act together. Take care of your people and do what you’re supposed to do.”

A new plaintiff’s motion filed Thursday asked the court to order DETR to pay eligible claims immediately, noting there’s no appeal process available, even though DETR says there is.

On Friday afternoon, Attorney Jason Guinasso, who was appointed as a Special Master to investigate and advise the court, filed his findings and report.

In the report, Guinasso says Nevada should consider partnering with the private sector, deploying the National Guard – as other states have done – and moving to cloud-based online process and call centers.

His findings show the primary bottlenecks and fractures in the system appear to be:

  • No opportunity for claimants to challenge DETR decisions or non-decisions
  • UI system not created to handle hundreds of thousands of claims in 90 days and establish new benefit programs to serve additional people
  • Widespread glitches in the benefit delivery system
  • Rampant claimant errors leading to significant delays in processing applications
  • No reliable person to provide claimants with information and assistance to accurately complete applications and resolve problems as they arise
  • Call center hired to answer claimant questions and provide assistance has failed to consistently deliver competent and compassionate service
  • New benefit programs are vulnerable to fraud
  • Systemic fraud has constipated the system and put additional strain on vexed people and limited resources

Lack of an appeal process for PUA applicants is a major issue highlighted in the report as a violation of legal due process.

PUA claimants do not have a way to appeal written determinations and haven’t had that since May 16. They have not been able to be heard, so their only option was to hire an attorney and sue.

This suggests that their due process has been violated by DETR.

Guinasso said making a decision that deprives someone of their property (in this case, unemployment benefits) without a fair hearing violates due process of law.

“With no appeal process, there’s no remedy available to recover benefits unjustifiably denied or delayed as a result of DETR decisions or non-decisions,” Guinasso wrote.

DETR says because PUA is new, a new appeal process must be established.

NOTE: An appeals module is EXPECTED to go live the morning of July 18. Then claimants will have 30 days to file appeals.

Guinasso’s report also confirms that Nevada was the last state in the nation to begin delivering PUA benefits to its claimants.

“In trying to explain the delay, DETR officials stated that because the existing system used by regular UI claimants was unable to handle the increased volume of PUA applications, the state was forced to contract with a third-party company to design an entirely new application system. While Nevada was unable to have its system operational until mid-May, several other states were able to design and implement new PUA application systems as early as mid-April. When Nevada finally launched its system for PUA claims on May 16th, all other states had already begun accepting and processing applications.”

SPECIAL MASTER’S RECOMMENDATIONS:

  • Appoint a Receiver to ensure the appeals process works.
  • Establish an Emergency Volunteer Claim Concierge Corps – recruit from civic organizations, labor unions, faith communities, non-profit organizations, and the business community (with support from the National Guard or another disaster-relief organization) to assist DETR staff in addressing the backlogged unemployment claims. Other states have done this. In Nevada, 1,000 competent volunteers could be deployed within several days of a court order to assist in processing backlogged claims and verifying identities of applications flagged as suspect. Volunteers could also be trained to help resolve user errors in completing applications. The objective would be to eliminate the backlog in 45 days.
  • If not for the contract binding the state to Alorica through December 31, 2020, the Special Master would recommend that the state terminate the contract immediately based on the avalanche of complaints about customer service and performance. Because they can’t terminate the contract, Guinasso recommends a comprehensive quality control review and additional training. He wrote, “It is unconscionable that the suffering of people who have lost their jobs due to circumstances beyond their control should be subjected to the cruelty of a call center that does not appear to be providing competent and compassionate service.”
  • Deny claims when fraud is suspected – “One of the best defenses to fraud is due process, including a hearing and opportunity to be heard. If the fraud being committed on benefit programs is as widespread as federal, state and local officials are saying, then applications that have more than one flag for fraud or otherwise can’t be resolved quickly by an adjudicator, should be immediately denied. A hearing referee will likely be in the best position to consider the merits of the applications and clear fraud flags from the applications of honest claimants. However, fraudsters are not likely to show up at a hearing to further perpetuate their fraudulent conduct. But, if they do, the hearing process will serve as an effective trap to help law enforcement capture thieves.”
  • To ensure timeliness: Issue an administrative finding that after 28 days, adjudication is authorized to issue a determination based on any and all facts present.
  • Expand “role” access to claims examiners within the UINV computer systems to allow them to resolve matters either routinely or administratively considered non-issues.
  • Mandate more effective and transparent messaging as it applies to program changes and impact.
  • Update the PUA program to incorporate/require/request identification information including scans of the NDL and Social Security Card at the time of filing OR conduct an automated cross-match of Mother’s Maiden Name and state identification number as fraud preventatives.
  • Set up a pool of adjudicators that receive pass-through calls from claims examiner staff to immediately address claimants with issues pending resolution where the issue is outstanding for a period in excess of 21 days.
  • Program Interactive Voice Recognition telephone systems to take claims and calls on certain days based on the last digit of the Social Security Number to ease the stress on phones and make it easier for parties to reach staff.
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Judge Barry Breslow is scheduled to make a decision on Monday.

Copyright 2020 Scripps Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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