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Jobless Aid Cutoff Lawsuits Push Ahead as Expiration Looms (1)

Aug. 23, 2021, 9:16 AMUpdated: Aug. 23, 2021, 4:31 PM

Courtroom disputes over the early cutoff of federal jobless aid march ahead in Florida, Ohio, Tennessee, Texas, and other states, despite an open question about what unemployed people stand to win after the federal programs end in two weeks.

At least a half dozen still-pending lawsuits seek to force governors and state workforce agencies to resume paying the enhanced unemployment benefits created by Congress in response to the Covid-19 pandemic. More than 25 states halted participation in some or all of those benefits earlier than the Sept. 6 expiration that Congress provided.

Workers won orders to resume the switched-off benefits in a handful of these lawsuits, the earliest being in Indiana in June and Maryland in early July. But now, with benefits expiring nationwide in just two weeks, the payoff for those pursuing court challenges could be small or nonexistent.

It’s “unclear whether the state could go back to the federal government and get funds for those benefits that have already passed” if litigation continues past Sept. 6, attorney Andrew Engel told an Ohio state appeals court panel Aug. 18. Engel argued on behalf of out-of-work Ohioans appealing a state trial court ruling that upheld Gov. Mike DeWine’s (R) decision to halt participation in one of the federal programs—the extra $300 weekly benefit.

The U.S. Department of Labor would evaluate “on a case-by-case basis” whether states that opted out can reverse the decision and pay retroactive federal benefits after Sept. 6, a DOL spokesperson said.

In theory, there’s a big pot of money on the line in these cases. The lead counsel in the Ohio case, former Ohio attorney general Marc Dann, estimated the state’s unemployed would have received nearly $100 million for the weeks that DeWine opted out of paying. The dollar amounts are larger in states that halted all federal unemployment programs, such as Tennessee where the plaintiffs’ attorney estimates out-of-work residents are losing $400 million in benefits. In a Missouri lawsuit, attorneys put the figure at $770 million.

Seeking Retroactive Benefits

Dann agreed it’s an unresolved question but said the state would be expected to ask the federal government for that money if his case is successful, even if the court order comes after Sept. 6.

“The funds have been appropriated, so there’s no reason why the federal government couldn’t do it retroactively,” he said. If not, he said he’d seek payment of the benefits from the state treasury instead.

In the Florida lawsuit—initially filed in Broward County and then transferred to Leon County—Tallahassee attorney Marie Mattox said she expects the judge will rule quickly after an Aug. 25 hearing.

“Our goal is to get them to do back-pay” plus any remaining benefits going forward until the Sept. 6 expiration, Mattox said. As in Ohio, Florida Gov. Ron DeSantis (R) ended only the $300 weekly supplement and continued paying other federal pandemic jobless aid.

The U.S. Labor Department in a July 12 program letter said states that halted the federal benefits can rejoin the programs before Sept. 6. If they do, there may be a lapse in benefits for most programs, but states would be required to let people retroactively claim weeks under the Pandemic Unemployment Assistance, which provides aid to independent contractors, the self-employed, and others who don’t qualify for traditional unemployment insurance.

The DOL spokesperson confirmed “if a state signs a new agreement, then participation in PUA is retroactive,” but added “participation in FPUC and PEUC resumes the week after a new agreement is signed.”

FPUC is the Federal Pandemic Unemployment Compensation, which provides the extra $300 per week added to all other unemployment benefits. PEUC is the Pandemic Emergency Unemployment Compensation, which provides added weeks of benefits for people who have exhausted their limit of traditional unemployment insurance.

Lawyers for five unemployed plaintiffs in Missouri asked a state court Aug. 11 to order benefits restored and paid retroactively to the extent allowed under U.S. Labor Department rules.

The July guidance from the Labor Department made clear “that retroactive benefits are available at least under the PUA program if a State rescinds its termination of participation. On information and belief, unemployment claimants in the State of Indiana have succeeded in obtaining retroactive” benefits in the other federal programs too, following a court order in their favor, St. Louis attorney Loretta Haggard of the firm Schuchat, Cook & Werner wrote in a footnote to the Missouri plaintiffs’ complaint.

The early cutoffs of federal jobless aid sparked a policy debate over the extent to which enhanced benefits were discouraging people from going back to work, compared with other factors such as child-care limitations and health concerns.

In the courtroom—or online court hearings—the disputes hinge largely on the interpretation of states’ unemployment statutes. The plaintiffs and state officials disagree on whether laws requiring states to secure all available unemployment benefits apply only to traditional unemployment insurance or also include the pandemic-era programs.

“Plaintiffs are shoehorning this benefit into state law,” Julie Pfeiffer, an assistant chief in the Ohio attorney general’s office, told the state appeals court.

But workers’ arguments have persuaded trial courts in Arkansas, Indiana, Maryland, and Oklahoma to order the benefits reinstated. Indiana’s Court of Appeals subsequently reversed the trial court’s decision, but too late for state officials to stop the federal benefits again before Sept. 6 because of a 30-day notice requirement.

A South Carolina judge agreed with the position of state officials in dismissing a lawsuit Aug. 13. The judge found the plaintiffs didn’t have a private right of action to sue Gov. Henry McMaster (R) over his decision to end benefits and said the federal pandemic aid isn’t among the Social Security Act benefits protected by the state unemployment statutes.

Awaiting Hearings, Decisions

The Ohio case awaits a decision from the state’s Tenth District Court of Appeals in Columbus. The court could order benefits to resume or it could send the case back to the trial court with instructions for further consideration, Dann said.

A Tallahassee judge told both sides in the Florida lawsuit that he plans to issue an order during or shortly after the Aug. 25 hearing, which would tee up the case for a likely appeal from either side.

The timeline for a decision is less clear in Texas, where a judge on Aug. 12 asked plaintiffs’ attorney David Sibley to clarify which plaintiffs he’s representing and what relief they’re requesting before scheduling another hearing. He initially filed the case in the name of two Facebook groups for unemployed Texans but later filed documents using named individual plaintiffs.

A similar lawsuit in Louisiana failed to persuade a trial court to restart benefits, and an appeal is expected.

Nashville attorney Gary Blackburn, who’s representing seven unemployed people as part of a proposed class in challenging Gov. Bill Lee’s (R) decision to halt benefits, said Tennesseans should be able to get back-pay for the lost weeks of benefits—even though a federal district court won’t rule on his preliminary injunction request before an Oct. 14 hearing, six weeks after the federal programs expire.

(Updated with comments from a U.S. Department of Labor spokesperson in the fifth paragraph.)

To contact the reporter on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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