RICHMOND, Va. (WRIC/WAVY) — The Virginia Employment Commission and legal advocacy groups that sued the agency on behalf of five residents have reached an agreement to dismiss the federal lawsuit over the VEC’s struggle to promptly settle disputed jobless claims.

The agreement has paved the way for a federal judge to dismiss the class-action lawsuit filed, but one of the plaintiffs’ attorneys does not see it as a defeat.

Although U.S. District Judge Henry E. Hudson says the lawsuit is no longer necessary, attorney Pat Levy-Lavelle says just the process of filing the complaint last spring spurred some encouraging progress from the VEC.

Levy-Lavelle is an attorney for the Legal Aid Justice Center, a group working alongside the Virginia Poverty Law Center, Legal Aid Works, Consumer Litigation Associates and Kelly Guzzo, PLC, on behalf of the plaintiffs.

The class action represented people having problems in two categories: those waiting for more than 21 days because of issues with their claims, and those who were getting benefits but had them abruptly cut off.

In April, five Virginia residents struggling to get the unemployment benefits they sought sued VEC Commissioner Ellen Marie Hess in federal court in Richmond. The class-action lawsuit alleged the VEC violated claimants’ rights for not responding to complaints and abruptly putting people’s benefits on hold without quickly adjudicating disputed claims. 

After months of sharing information and acknowledging VEC’s progress on resolving unemployment claims quicker, the parties filed an order to end the lawsuit. The judge overseeing the case will still have to sign off on the proposed agreement.

After agreement from both sides, Hudson said the VEC had reached enough progress benchmarks. Levy-Lavelle says the lawsuit led to some progress in having claims adjudicated “to bring deputy adjudications to over 125,000 people quicker than it would have otherwise happened throughout much of 2021,” but he says a new backlog has developed among claims that are being appealed.

“The Court hereby FINDS that the VEC has met or substantially achieved the various performance standards and benchmarks set forth in the Settlement Order and the Parties’ subsequent progress reports related to the processing of unemployment claims and communication with claimants,” the order states.

The commission was required to “substantially resolve at least 95%” of the 92,158 unpaid claims awaiting adjudication as of May 10 under the settlement agreement. The state agency reported that it cleared that specific backlog a month before it was required to do so, but Hudson denied the VEC’s dismissal request in November after the plaintiffs claimed the backlog was growing.

When there’s an issue with a claim, it will first go to a deputy adjudicator. If there’s no resolution it then goes to an appeals examiner, and if it’s still unresolved, it would rise to a special examiner. Levy-Lavelle says the current problem is between the deputy and appeals levels.

“That backlog has grown. It’s now up to about 89,000 cases or so,” he said, and points to additional problems with initial claims in the past three months. “Just yesterday we heard that there’s about 7,500 who have new claims since October 15, 2021 who are waiting for their claims to be adjudicated, and not being paid in the meantime.”

In a status report to the court, the VEC agreed to resolve at least 95% of the pending unpaid claims that have come in since May 10 and through Oct. 15. The state had until Nov. 19 to clear the backlog and had until Nov. 30 to file a status report addressing the VEC’s compliance.

During a conference call on Dec. 14, Hudson directed the legal teams for VEC and the plaintiffs to prepare an order of dismissal for the court to review.

Despite noting that the VEC has complied with the settlement order and has made progress on adjudicating claims, legal groups working for the plaintiffs stressed that more work needs to be done to help ensure the agency is prepared for any future issues.

“The lawsuit did a lot of good to help people waiting without benefits, but it would be a mistake to think we are packing up shop,” Levy-Lavelle said in an interview. “This is definitely not the end of the story.”

Under the proposed order, the parties will continue to work together and share information “to address and resolve identified issues in a manner that the Court concludes will no longer require its oversight.”

Levy-Lavelle said Congress can help Virginia and every other state by re-authorizing them to hire outside claims personnel. That plan was in place last summer, but the authorization expired in early September, so now the VEC is once again understaffed.

Levy-Lavelle also pointed out that the court has acknowledged how the lawsuit raised awareness on issues regarding Virginia’s processing of unemployment benefits. He told WAVY sister station 8News the legal advocacy groups have tracked the results and found that at least 50,000 Virginians who were abruptly stripped of benefits during the adjudication process have received benefits that they were entitled to since the lawsuit was filed.

The VEC sent this statement to 10 On Your Side:

“The VEC is pleased that the case has been dismissed.  We have made an enormous amount of progress over the past two years addressing the unprecedented economic impact from the pandemic.  We remain committed to serving our customers and very much appreciate the herculean efforts of our employees during this period.”

A report from the state’s watchdog agency made public in September found that VEC was dealing with unprecedented stress during the pandemic but that the agency was not prepared to handle the huge spike in unemployment claims.

Legal advice for people with unemployment problems is available through the Legal Aid Society of Eastern Virginia.