State Demands Arizonans Pay Back Thousands in Unemployment Benefits

The Arizona State Capitol
The Arizona State Capitol Gage Skidmore
People who have struggled with navigating Arizona's dysfunctional state unemployment benefits system in the pandemic now face a new hurdle: Sudden demands from the state to pay back thousands in supposedly owed benefits.

Not everyone is in a position to be able to pay those benefits back, especially with the economy in the gutter and the coronavirus still raging in the United States.

Deniz Carbajal doesn't know how she'll be able to return the money that the state now claims should not have been sent to her.

The 21-year-old had been working as a treatment coordinator at a dental clinic in Tucson when the pandemic hit back in March, and Governor Ducey ordered a stay-at-home order. She and all of her coworkers were promptly furloughed.

"I had a steady job' it was a well-paying job. I worked at a dental office, and of course, once COVID hit, they furloughed everyone in my company directly because of the pandemic," Carbajal said. "We totally went into lockdown mode."

She applied for unemployment benefits through the Department of Economic Security (DES) but was denied initially due to her former employer payout for sick leave. She then moved in with her parents to save money. A few months later, a family friend who also moved in because his job had been disrupted told her about the state's new Pandemic Unemployment Assistance program, which had looser restrictions on who could access the benefits. She was admitted and received around six weeks of payments starting in early June.

One day, when she went to file her weekly claim, DES' online website had changed. The usual tab that she could select to indicate why she was laid off was gone. So she picked the next most relevant option, which was a tab stating that her workplace had closed due to the pandemic.

Her case was soon put "under review," and her benefits were cut off. Roughly three months later, in late September, she received letters from DES stating that she "intentionally committed fraud" because she was in fact eligible for the regular unemployment and that she had to pay back the benefits that were previously issued to her.

"It’s going to be around $5,000 for me and it’s just a lot," Carbajal said. "There are still bills to pay. I’m in a lot of debt right now, with my bank, with family members, all sorts of people. I have been looking for a job."

"I was more mad about the 'intentional fraud'," she added. "I wish they wouldn't have approved me — and I thought my criteria honestly matched the pandemic assistance — then give me all this money, put me through this and then say 'no, wait, that’s wrong you have to pay it all back'."

She plans to appeal the verdict. But she, like so many other Arizonans who have dealt with the state's unemployment benefits system, is finding it nearly impossible to get connected with staff at DES to answer her questions regarding her claim or the letters she received.

"I’ve called probably a million times. I’ve sent maybe seven emails to different email addresses within their system. I’ve received nothing," Carbajal said. "It’s like virtually impossible, practically impossible to get ahold of them in, anyway."

Russell, a 59-year-old former restaurant industry worker who declined to give his last name due to privacy concerns, had a somewhat similar experience. He applied for pandemic-specific unemployment benefits back in June and was accepted. He received seven weeks of payments before DES stopped issuing money. He called the agency repeatedly but couldn't get through to anyone. Then, in September, he suddenly received a bulk deposit of around $3,800 — only to subsequently get four letters in the mail from DES claiming that he was overpaid thousands of dollars. The paperwork states that the error was "Administrative/Departmental."

"It was like $7,000 dollars worth of payments that they’re saying that I owe them now," Russell said. "I’m looking for work and now I got the state of Arizona against Russ. They have their taxpayer-paid attorneys."

When asked for comment on people who experienced getting letters from DES demanding that the agency be repaid large sums of money, DES spokesperson Brett Bezio pointed to the agency's policy on unemployment insurance overpayments and fraud.

"An unemployment insurance overpayment is created when a claimant receives more benefits than the claimant is lawfully entitled to receive," he wrote. "Options are available to claimants regarding overpayment plans, depending upon the classification of the overpayment."

The agency has been struggling to handle both the surge in unemployment claims since the pandemic hit as well as fraud. Arizona Democrats have slammed Governor Doug Ducey for both DES' notoriously meager unemployment benefits and the agency's well-documented issues with getting payments to people who are eligible. Meanwhile, in Facebook groups with memberships in the thousands, Arizonans continue to express frustration with the agency's dysfunctional system.

Policies aside, it's still nerve-wracking for people hit with overpayment letters. Phoenix resident Brandi Lee said that her husband was laid off from his job as sand-blaster back in March. He was cleared for pandemic-related unemployment benefits, and received payments through mid-September. There was an issue with a skipped weekly payment that didn't land in his account. Then, they were told that he owed DES $8,000 because he was "paid out of the wrong funding group," Lee said.

"How does he owe 8,000 dollars?" she said. "We have no idea why we went from having no payment to owing almost 9,000 dollars in the state of Arizona. Everything was fine up until this week."

They plan to appeal DES' verdict. But to Lee, the experience was indicative of how broken the state's unemployment benefits system is.

"It’s really disheartening because not everyone has the support system to fight them," she said. "People are owing thousands and thousands of dollars but they didn’t do anything wrong. That’s not okay. We need answers as to how this happened."
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Josh Kelety is a staff writer at Phoenix New Times. Previously, he worked as a reporter for the Inlander and Seattle Weekly.
Contact: Josh Kelety