The California State Auditor confirmed this week what Los Angeles Times readers learned in February and seekers of unemployment compensation have known for even longer: hundreds of thousands of claims have been wrongly denied by the state.

Auditor Elaine Howle reviewed claims that were denied by the state Employment Development Department (EDD) during the past four years and found nearly half of those who appealed the decision won. The finding confirmed a story the Times published after reviewing 296,030 appeals between July 2012 and October 2013.

The audit said the department improperly denied claims that may have been in error but weren’t screwed up on purpose. “We found that the appeals board frequently overturned EDD’s determinations that claimants made false statements to receive benefits because EDD had not adequately established that the statements were made willfully,” the auditor wrote.

She recommended they not jump to those kind of conclusions and make an effort to contact claimants or employees before denying critical, life-changing benefits. The audit also suggested EDD representatives attend appeal hearings, which they “rarely” do, and  concluded that department employees do not follow precedent set by the Unemployment Appeals Board (UAB).

The board oversees a quasi-judicial system that hears challenges to decisions about unemployment and disability benefits, as well as tax-liability assessments made by the EDD. When employees or employers disagree with department decisions, they can appeal to an administrative law judge and, if still unhappy, the seven-member board itself.

Department Director Patrick Henning Jr. did not concur with many of the auditor’s conclusions. “We disagree with the report’s finding that the Department does not always follow Precedent Benefit Decisions and does not always gather necessary information before denying benefits,” he wrote.
Henning argued that employees were instructed in the rules, regulations and precedents, to which the auditor responded,  “EDD employees, while they may be taught the appropriate legal precedents, are not applying them correctly.”    

EDD took issue with the auditor’s use of appeal board data to criticize the department and said, in its present form, the information was of “dubious” value. Henning said EDD needed “useful aggregated data in a usable format.”

–Ken Broder

To Learn More:

Audit: State's Handling of Jobless Claims Hurt Hundreds of Thousands (by Marc Lifsher, Los Angeles Times)

Californians Who Appeal Denial of Jobless Benefits Win More than Half the Time (by Ken Broder, AllGov California)

State Auditor Says Unemployment Agency Ignored Feds and Blew $516 Million (by Ken Broder, AllGov California)

Employment Development Department (California State Auditor) (pdf)