MD remains behind on thousands of unemployment claims after 2022 settlement

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After settling a lawsuit in 2022 over an ineffective unemployment insurance system and agreeing to reform the state’s overwhelmed claims process, the Maryland Department of Labor is still failing to make timely payments to thousands of people who are out of work and awaiting their benefits.

Claimants and attorneys who sued the state in 2021 have blamed then-Labor Secretary Tiffany Robinson, who was in the role during former Republican Gov. Larry Hogan’s second term. Robinson oversaw a department that was inundated with claims as people lost work and wages during the COVID-19 pandemic.

Progress has remained slow under Secretary Portia Wu, who has led the department since Gov. Wes Moore took office in January 2023.

The department agreed in its settlement to process a certain percentage of claims within three to eight weeks, and to resume or deny payments for all paused claims within two weeks.

But quarterly reports from the end of 2022 through the first three months of 2024 show that the department has met none of the agreed-upon targets.

To avoid returning to court, plaintiffs and the state agreed to extend for another year — until June 9, 2025 — a period of monitoring progress toward the settlement terms.

“People are not getting their unemployment benefits when they’re supposed to be,” said Debra Gardner, legal director for the Public Justice Center. “That’s a pretty significant core of the point of the lawsuit and the point of the settlement.”

It’s unclear to what extent the 11-week partial closure of the Port of Baltimore following the collapse of the Francis Scott Key Bridge affected claims processing.

Claims from port workers increased following the March 26 disaster, and the labor department established an unemployment line specifically for them.

The next quarterly report, which will cover all claims processed between April 1 and June 30, may show more of an uptick, but it won’t state how many claims were from port workers, according to the department.

RELATED: Data remains unclear on whether Port of Baltimore suffered job losses after Key Bridge collapse

The Baltimore-based nonprofit Public Justice Center is one of two law groups representing six plaintiffs in their class-action lawsuit filed in 2021 against the state’s labor secretary.

The plaintiffs alleged that the department showed “gross and systemic failures” in administering benefits and prevented tens of thousands of Marylanders from receiving payments, according to federal court documents.

They alleged that people had their claims languish for months or had their benefits suddenly cut off without notice or an explanation from the department.

They also contended that the department issued tens of thousands of overpayment notices without providing written notices for why or a chance to contest them.

The two parties eventually reached a settlement agreement that included a $300,000 payout to the Public Justice Center and the Baltimore law practice Gallagher Evelius & Jones, as well as targets for processing claims quicker.

State officials agreed that by June 2024 the Department of Labor would process 92% of claims within three weeks and 97% within eight weeks. They also agreed that the department would either resume or deny payments for all paused claims within two weeks.

Despite some periods of improvement between the end of 2022 and the early months of 2024, the department’s reporting numbers for processing claims on time have ended up right back where they began.

Between January 1 and March 31, 2024, the most recent period for which the state has a quarterly report, the department processed 77% of claims within three weeks. Nearly 6,600 people had to wait at least that long for their claim to be processed.

The department also processed 87% of claims within eight weeks.

“They’ve not been able to meet the benchmarks at all,” Gardner said.

There was marked improvement in processing paused claims, as 99% had payments resumed or denied within two weeks, though the department still fell short of the 100% target.

A spokeswoman for Wu, who oversaw the department during five of the six reporting periods, said that progress has been complicated by troubles with the state’s online system and a prevalence of fraudulent claims that has increased since the pandemic.

The department launched its online system, BEACON, in 2020 as a one-stop shop to file for unemployment benefits, including pandemic-related assistance, weekly certifications, associated documents and appeals.

But claimants and attorneys have said that the system and its associated mobile app — crucial for those without reliable computer access — were plagued with problems from the jump, including unclickable buttons and “claimants’ frequent inability to file weekly certifications on which eligibility and payment of benefits depend,” court documents state.

“It’s a hot mess, has always been — trips people up with their claims, trips up the agency; it’s horrible,” said Gardner. “The agency has a very specific plan for fixing that thing and if they succeed with that, that will be amazing.”

The U.S. Department of Labor in 2023 established a grant program specifically for states to upgrade their unemployment insurance systems.

Maryland labor department officials will use the $11 million grant they received in April to bolster BEACON, with plans to make the system easier for claimants to navigate and prevent false flags for fraud, among other measures to prevent delays.

The department’s Division of Unemployment Insurance also got a permanent director after a series of interim leaders in recent months.

Rachel Torres, formerly an administrator and national director of job corps at the U.S. Department of Labor Employment Training Administration, began as assistant secretary for the unemployment insurance division on June 3.

Wu was reportedly looking for someone to handle overhauling the BEACON system with other departmental changes. Torres brought extensive experience in improving operations and strong federal relationships, valuable for administering federal programs like unemployment insurance.

The plaintiffs, meanwhile, have maintained that much of the blame for the unemployment insurance debacle lies with Robinson.

“The prior administration left the unemployment insurance division in quite a bit of disarray and lack of meaningful preparation for addressing these issues and didn’t really do much about them before they left,” Gardner said.

Robinson, who is now a deputy chief of staff for Virginia Gov. Glenn Youngkin, could not be reached for comment by email. Multiple spokespeople for the Republican governor did not respond to emails asking to be connected with Robinson.

Gardner claimed that the Hogan administration left Wu and her team with a short-staffed and under-trained department with which to handle a barrage of claims and fix the BEACON system.

The attorneys, though, appear to be on board with the department’s plans for processing claims quicker.

Gardner said her team plans to continue working with the administration to avoid further litigation, “because we really do feel like they’ve been working in good faith and transparent with us.

“That would have to change pretty dramatically for us to think it would be more efficient to go back to contested litigation,” she said.

(This story has been updated to include information about leadership in Maryland’s unemployment insurance division.)