‘David versus Goliath situation’: 26K Nevadans await appeal hearing for unemployment claims

Allison Padua was heartbroken to leave Las Vegas during the pandemic, essentially ending her 25-year career in gaming.

But she says an autoimmune disorder prevented her from returning to work as a dealer at one of the Strip’s newest casinos, and months fighting with the Department of Employment, Training and Rehabilitation over unemployment benefits left her broke and with no choice but to move in with family in her Midwestern hometown.

“I love the job. It’s just meeting people and dealing cards, which is fun to make a living. What more can you ask for?” Padua, a day-one employee at The Cosmopolitan, said.

But after three years disputing multiple claims from Nevada saying she was overpaid more than $46,000 in unemployment benefits from 2020 and 2021, Padua said moving was the only option left.

In the early days of the COVID-19 pandemic, DETR was flooded with an unprecedented number of unemployment claims — the state’s unemployment rate peaked at 30.6 percent in April 2020. Adding to the demand for benefits was the rollout of new pandemic-related programs such as Pandemic Unemployment Assistance for self-employed workers. DETR paid nearly 8.1 million weeks of unemployment benefits in 2020 alone, according to the Department of Labor.

Last year, DETR claimed it paid out too much in unemployment benefits during the pandemic — a whopping $1.4 billion. More than half of the estimated overpayments weren’t attributed to fraud, the state agency said.

The agency proceeded to start sending out notices late last year to more than 150,000 Nevada residents asking for the money back. As of Aug. 10, the agency has recovered $21.5 million in PUA overpayments and roughly $745.3 million in traditional unemployment insurance, it said.

This wave of overpayment notices — part of the attempt to retrieve the errant money — has fueled a backlog of incomplete appeals, with more than 26,000 claims still awaiting hearings and final decisions. Meanwhile, Nevadans say they are frustrated with the drawn-out process that can still result in them owing thousands of dollars to the state long after the money was spent.

Backlog details

DETR said about 25,000 traditional unemployment insurance claims and 1,200 PUA claims make up its current appeals backlog, mostly made up of requests for reconsideration of denied claims or overpayment determinations.

This backlog has been cut since Director Chris Sewell spoke to the Nevada Legislature about the agency in February. Then, the agency was dealing with 13,000 initial determination cases and 33,000 appeals. Sewell told lawmakers the first backlog would take six months to process. In a recent interview with the Las Vegas Review-Journal, Sewell estimated the backlog would be cleared “to (U.S. Department of Labor) standards” by about Aug. 21.

Sewell said he intends for the department to get through the backlogged appeals by the end of the year.

“My biggest challenge is time,” he said. “I want to get this done, I know the governor (Joe Lombardo) wants to get this done. I’m going to put as many resources now into appeals that I can now that adjudication is almost caught up, I’ll be able to shift some of that system over to appeals.”

To speed up the process, DETR hired Protiviti Government Services, an Alexandria, Virginia-based contractor, in March for $1 million, according to the state contract obtained through a public records request. The vendor’s hearing referees are responsible for conducting hearings and drafting recommendations for DETR, which is responsible for the final determination.

Staff is expected to hear and write about 23 cases per week, Sewell said. The state said it has 16 employees addressing the backlog and 13 contractors. They are assigned to various tasks that include hearing cases and writing decisions, while others are assigned to reviewing the contractors’ drafts.

At that rate, it would take all 29 employees until mid-May to get through the 26,000 cases, rough estimations by the Review-Journal show.

Protiviti is one of several contracts the department entered into to process and resolve unemployment insurance-related work since the pandemic’s onset. Three other third-party vendors were awarded contracts that totaled $49.4 million, records show.

‘David versus Goliath’

Despite the support meant to address the backlog, many Nevadans report frustration with the lengthy and at times confusing appeals process. Nevada Legal Services senior attorney Elizabeth Carmona said her nonprofit legal aid group dedicates about half of their work to addressing unemployment cases, handling every level of appeal in the department and at the court.

Carmona said the process can be long and difficult for a person with no legal background to navigate. One client fought a benefits disqualification for 2½ years, 18 months of which was awaiting a district judge’s decision in the petition for judicial review, or a step that challenges the DETR decision in court. She estimated the case took 60 hours of her time.

“These credibility determinations are being made by these referees who are so pro-employer,” she said. “It really feels like a David versus Goliath situation where we’re just up against this giant organization and we’re having to fight and keep appealing, using our time and resources to fight denials that really aren’t appropriate in the first place. They’re really exhausting cases to handle.”

Some Nevadans decline to take it to court because of the effort involved. Henderson resident Sarah Spandrio was denied PUA after receiving about six months of unemployment payments. Her former employer, a property management company, said she left for reasons unrelated to COVID-19, so the state sought $20,062 back from her in October 2020.

“I cried,” Spandrio said. “I thought, how am I ever going to try chip away through this, especially when I’m not working and my kids are at home doing Zoom school?”

Spandrio got her appeal date in April 2021, fighting the decision up to a review board in December 2021. She received letters from DETR explaining her PUA benefits eligibility all the while, according to correspondence provided to the Review-Journal, confusing her further.

Years later, Spandrio is still feeling the effects of the ordeal. She filed for Chapter 13 bankruptcy in October 2021 to address the debt owed, bringing down a credit score that she was proud of and causing her to surrender a vehicle.

Despite the set path to addressing her balance, Spandrio said she’s still in fear.

“It’s just been devastating every time I get anything from EmployNV.com,” Spandrio said. “I dread seeing anything from them ever again. But I don’t consider this done yet until my bankruptcy case is discharged. All it does is feel like they’re standing over my shoulder.”

Miscommunication causes frustration

Other Nevadans describe a confusing network of communication that leaves them wondering whether their fight will ever be over. Las Vegas resident and small-business owner Letitia L’Heureux received PUA benefits during the pandemic, but the state sent a letter in December 2022 saying she was overpaid almost $22,000 in two separate claims. She appealed both, and the agency said they would hear both together, according to official communications she shared with the Review-Journal.

L’Heureux’s appeal was heard in late May. Though she had already submitted her 2019 tax returns, the appeal referee said the agency needed her tax transcripts, a document that can be requested from the IRS. Her balance was cleared about a week after sending the transcript.

“I felt like it was a big extortion plot,” she said. “The way they presented it, it was based on fear. There was no information up front that it could have been cleared up quickly. It was just a fear-based tactic.”

L’Heureux thought that was the end of her interactions with the agency. But, after checking her benefits portal online when a reporter called, she realized the state had not bundled the two claims after all. In June, the agency posted communications on the portal — with no additional email or letter — saying the remaining $5,600 claim was due.

“I’m frightened of them because it’s so hard to fight even when you’re on the right side,” she said. “Just getting someone to understand or even hear you, that knows what’s going on – you can’t get a hold of them.”

The experience has left L’Heureux and others interviewed describing the agency as “incompetent.” But Sewell rejected that criticism and said his staff is working through an unprecedented backlog and a problem he inherited from the previous administration under former Gov. Steve Sisolak.

“(Nevadans are) frustrated, and I understand that,” Sewell said. “But I’ve gotta take them first come, first serve. Once you have your appeal filed, you will be heard. I’m going to try to get through that as quickly as I can, and that’s where we stand.”

McKenna Ross is a corps member with Report for America, a national service program that places journalists into local newsrooms. Contact her at mross@reviewjournal.com. Follow @mckenna_ross_ on X.