Redux: Unemployment hearing offices in Wisconsin are still closing

After this December 5th post and media reports (see here, here, and here), numerous legislators complained to Secretary Frostman about the closing of unemployment hearing offices throughout the state. The Department of Workforce Development and the secretary responded on December 11th with a press release announcing that in-person hearings will continue to be available in Eau Claire and Fox Valley and a letter full of corporate speak that promised much but said little. This letter indicated that:

  • access to in-person hearings throughout the state continues;
  • offices in Madison, Eau Claire, and Fox Valley are relocating or closing but that staff in these offices have the choice to relocate to GEF-1 in Madison or to work remotely and that the $350,000 in savings will lead to system improvements for everyone;
  • these closings are based on reduced federal funding for the administration of the unemployment system and a requirement that federal funds cannot be used to lease vacant office space;
  • telephone hearings are increasing because of their convenience to the parties and other states have nearly 99% of their hearings by telephone;
  • in-person hearings will continue in northern Wisconsin in shared space already leased by the Department or in other locations identified by stakeholders;
  • modernization efforts have made maintaining separate hearing offices unnecessary for administrative purposes; and
  • support for job services continue to be available throughout the state at libraries, job centers, and the mobile job center van.

None of these points explain exactly when and why this decision to close the hearing offices was made. And, the substance of what is stated in the letter is simply lacking.

  • “Access” here is an open-ended statement without any explanation or clarification. Does the access here simply refer to in-person hearings currently being available until all of the offices are closed?
  • Yes, offices are closing or relocating. But, only administrative law judges are being given the option of working remotely (i.e., from home, and no one knows how that proposal will work). Other staffers have been told their only option is to relocate to GEF-1 in Madison, transfer to another job, or be laid off.

Note: when the administrative law judges were unionized, they pushed for a work-at-home option with the Doyle administration for writing decisions. The Department flatly rejected that proposal because security protocols could not be put in place to allow such an option. Now, the Department is apparently proposing that administrative law judges will both write decisions and conduct telephone hearings from their homes.

  • $350,000 in savings is chump change for the Department. In October 2019, the Department’s program integrity fund (line 228 of this report) reveals that this fund was $13,122,000 after spending $2,484,532.38 that month. In November 2019, this program integrity fund was $11,766,000 after spending $1,833,441.58 that month. The Department essentially has $11+ million to spend on administrative costs as it deems fit and is burning through $1.8+ million a month on its efforts to find claimant concealment.

Note: for comparison, the entire budget for the Labor and Industry Commission is approximately $2.7 million per fiscal year.

  • Yes, federal funding has declined as the number of claims have declined. But, these hearing offices were open and maintained in the 1990s, when unemployment claims were similarly low (but, there were many more Department personnel and every Department notice had to be mailed, including weekly claim confirmations, so the administrative costs for running the unemployment system were higher). And, these hearing offices are only becoming vacant because the Department has decided to close them in the first place. If the Department kept them open and occupied, then the prohibition on renting vacant space would not apply. In other words, this issue is about priorities and has nothing to do with funding.
  • The growing number of telephone hearings presumes that the parties are pushing for their use and is not the result of a Department making telephone hearings the only option (by scheduling a hearing in Madison, for example, when the parties reside in Rice Lake). I know of absolutely no one that prefers a telephone hearing over an in-person hearing. Certainly, a drive of an hour or more for an unemployment hearing is not convenient, and in such cases a telephone hearing may be more appealing. But, parties always had the option of a long-distance drive if they thought in-person attendance was important enough. And, certainly in numerous situations (many witnesses, complex evidence, or sharp factual disputes between witnesses) parties still drive hours to attend a hearing despite the “convenience” of a phone hearing. Now, it appears that there will be no option for in-person attendance. Nor, is there any indication about what criteria will be used by the Department to allow a party to attend an in-person hearing. Finally, the fact that other states have 99% of their hearings by phone should not mean that telephone hearings are a good idea for Wisconsin. If that was the case, then the Department should not be saying here that in-person hearings will still be available.

Note: Right now in Madison, there is no identified procedure or process for attending a hearing in-person at the available hearing office (in GEF-1). In November 2019, my requests for an in-person hearing in Madison were met with deaf ears. In January 2020, I saw an ALJ conducting an in-person hearing in one of the equal rights hearing rooms, but my inquiries into how that hearing occurred have not been returned. A student for the Madison unemployment clinic reports utter confusion in December 2019 when he went to GEF-1 to review a case file. So, if there is no in-person option available in Madison where a hearing office in GEF-1 is still located, it is hard to understand how in-person hearings will occur in Eau Claire or Fox Valley, for instance, when there is no longer any hearing office or hearing staff whatsoever. [ + The ability to conduct in-person hearings in Northern Wisconsin is completely unexplained. Twenty-plus years ago, hearings were held at numerous locations outside of the regional hearing offices in order to cut down on travel time for the parties. With hearing administration centralized in Madison, I do not understand how the Department will suddenly start having in-person hearings at neutral locations throughout Northern Wisconsin, as the folks in Madison will most likely lack familiarity with the geography and travel issues connected with possible neutral locations. What seems more likely is that the Department will start having in-person hearings at the offices of the employer. Such an option is certainly agreeable to employers, but most employees will probably not think they are getting a fair shake in such circumstances. If in-person hearings in Northern Wisconsin are still viable, then the Department should be indicating in some way how in-person hearings will be conducted in the future when there are no longer any open hearing offices.

Note: In the 1990s, hearings could be conducted on-the-fly at remote locations because all an administrative law judge needed was a portable recorder, a notepad, and a laptop. With all unemployment hearings now being recorded via a fancy VOIP phone system, high-speed Internet access is essential for these hearings. Given how high-speed broadband is difficult to have in sections of Northern Wisconsin, is unclear what protocols the Department will have in place to make sure Internet access is sufficient for the Department’s current recording technology.

Note: The geography issues should NOT be under-estimated. Staffers in Madison have on numerous occasions confused Appleton, Neenah, and Menasha with each other. If these Fox Valley cities cannot be kept distinct, I do not have much confidence in how the Department will manage a case that has an employer in Oconto Falls and a claimant in Wausaukee.

  • The reference to “modernization” efforts essentially indicates that the Department made local hearing offices unnecessary because everything could be handled in one office. As such, this statement focuses entirely on the Department’s own administrative convenience. There is no information in this letter about what specific steps or actions or criteria the Department will implement in regards to making the hearing process more accessible.
  • The availability of job services (which is not all that helpful given the e-file requirements the Department has mandated for claimants) provides no help with unemployment hearings. Access to case files in hearings, for instance, is not available from job centers. Indeed, it appears that all case files will be prepared in Madison, so the parties and their counsel will never see reports and other documents which administrative law judges review but which usually are not included in the formal hearing record. For instance, with the relocation of the Madison hearing office to GEF-1, I no longer have the option to review hearing files prior to the hearing even though I am a two minute drive from GEF-1.

Interestingly, the available records indicate that the Department actually began closing these offices within weeks of the 2018 governor’s election or even earlier.

So, either the current administration pushed for these closures as part of the transition from the prior administration to the current administration (doubtful) or the current administration is being handed a “story” by Department staffers that Secretary Frostman cannot figure out is a load of @#&!. Either way, these hearing office closures are “stories” that no one at the moment should accept.

A possible change on the UI fraud vendetta?

Mark Sommerhauser had an article this past Sunday for the Wisconsin State Journal about the push started by the prior administration for charging fraud against claimants for their non-intentional, claim-filing mistakes.

Not surprisingly, the former unemployment administrator, Joe Handrick, talked up how claimant fraud cases were, according to him, always legitimate.

Handrick said he fears those efforts could lose momentum under a provision of Evers’ plan for the next state budget, which calls for eliminating the one-week waiting period. Handrick said the waiting period was crucial in enabling state officials to catch fraudulent applications.

Handrick also rejects claims that some people prosecuted for fraud only made mistakes, saying the department long has distinguished between intentional and inadvertent omissions by claimants that lead to benefit over-payments.

“The things that get assigned as fraud are where the person clearly and intentionally attempts to defraud the people of the state of Wisconsin,” Handrick said. “Only the worst of the worst get referred to district attorneys for prosecution.”

There are two major problems with this statement.

First, the waiting week has absolutely nothing to do with alleged fraud investigations. The waiting week originally existed as a mechanism for delaying payment of unemployment benefits because of administrative difficulties in processing unemployment claims. Since the 1980s, however, that delay has no longer been needed, and now a waiting week’s only purpose is to reduce the unemployment benefits that are paid out. See Avoiding Waiting Weeks, “Unemployment Insurance Policy Advocate’s Toolkit” at 56-7.

This claim about waiting weeks is even more surprising in light of the Department’s obvious delays in investigating claim-filing mistakes. Indeed, the Department has gone out of its way to delay investigations and efforts into claim-filing mistakes so as to make the amounts at issue larger when the Department finally gets around to examining alleged mistakes. Furthermore, while other states have instituted practices that actually match claim-filing information with employer’s withholding tax reporting, Wisconsin has refused to implement such an obvious mechanism for catching claim-filing mistakes quickly. See my discussion of Massachusetts and New Mexico in Findings of the unemployment audit (17 Dec. 2014). The Commission as well has observed that the Department’s concealment efforts do NOT prevent improper payments from occurring in the first place and has noted that the Department’s concealment investigations often lead to exceptionally long and unwarranted delays in benefit payments.

Second, Mr. Handrick is ignoring the hundreds of cases in which the Department has alleged fraud for UNintentional claim-filing mistakes. There is a reason, after all, for why the Department wanted the Commission eliminated in the last budget cycle. See LIRC’s elimination (1 March 2017). In 2014, only 20% of the Department’s concealment charges that were appealed ended up being affirmed. This evidence indicates that only one out of every five of the Department’s concealment charges are actually based on intentional acts of claimants.

Note: recent cases that have come to my attention indicate that the Department’s appetite for alleging concealment has only increased over the years. See Thoreson v. Thor’s Wolverine Den LLC, UI Hearing Nos. 18401886MD and 18401885MD (22 Mar. 2019) (claimant who helped brother tend bar for no pay does not have to repay any unemployment benefits and certainly not the $25,000 in alleged concealment charged by the Department because claimant did no work for brother).

In other words, there is a gigantic gap between Handrick’s statements about rampant unemployment fraud and the reality of folks being confused and making accidental mistakes when attempting to navigate a hostile and opaque claim-filing system. No one should be taking Handrick’s statement’s at face value. Luckily, the new Department secretary, Caleb Frostman, indicates in the State Journal article that he wants to make the unemployment claim-filing process friendlier to claimants. Here’s hoping he and the Department get to work on this goal. And soon.