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DES disqualified a Valley man from pandemic unemployment benefits. A judge said poor record keeping is to blame

DES says tens of thousands of people were overpaid benefits by mistake and are now trying to recoup those funds.

PHOENIX — What started with dozens of letters, repeat and contradictory emails, and phone calls to Eric Elliott is coming to some resolution in a 12News conference room.

Sitting on the phone with an administrative law judge for about 40 minutes, Eric Elliott is again going back through his Pandemic Unemployment Assistance (PUA) claim he filed with the Arizona Department of Economic Security in 2020. 

Last month, Elliott received several letters, which in the end, showed DES decided that Elliott needed to pay back the benefits he qualified for two years ago. 

RELATED: 'That is the director of DES’ fault': Arizona residents continue to receive letters demanding payback of pandemic unemployment

Elliott was classified as a "non-fraud" overpayment. According to a DES spokesperson, that would make Elliott one of at least 56,000 people DES has classified as such since 2020 in both the regular Unemployment Insurance system and PUA system. It equates to an estimated $60 million paid to people by mistake.

That's in addition to the billions of dollars the department paid in fraud. 

Now, it's trying to recoup that cash. 

"They're not taking that from me," Elliott said. "And they're gonna take that from a lot of people that don't deserve it." 

Elliott appealed the decision by DES to keep his benefits, which led to the hearing he came to 12News' conference room for. 

The judge said Monday that Elliott's hearing was not open to the public or press, so 12News' photographer left, but our camera stayed on. 

Elliott told the judge the camera was still recording and allowed 12News to broadcast it. 

"Yes, from here to the moon," Elliott said. "Zero transparency in that agency whatsoever, as evidenced today, you can't even have a hearing in front of them." 

In Elliott's hearing, the judge found the confusion came down to one document that Elliott had already sent in twice before. The judge said the latest copy of the document Elliott had sent in was illegible. 

"If they had dug a little further, they would have seen there's at least twice you properly sent a legible document," the judge told Elliott during the hearing. 

The judge said he'd take the hearing under advisement but said the decision would favor Elliott. 

"There's no question I'm going to rule in your favor here, sir," the judge told Elliott. 

"I knew that would be the outcome. But at the same time, I'm not. I don't feel any better because I wouldn't bet my bottom dollar that they're not going to come back on something else, that no one knows what they're doing there," Elliott said. 

Not all overpayments have to be recouped

12News has requested interviews with DES Director Michael Wisehart on the overpayments and other related issues since August. Since Elliott's October story aired, 12News has requested an interview with Wisehart at least nine times. Those requests have all been ignored by DES spokespeople. 

In an emailed statement, a spokesperson said in part that DES "has focused on issuing Determination of Overpayment notices to Pandemic Unemployment Assistance (PUA) accounts with overpayments categorized as fraud." adding "most" other types of overpayments, including non-fraud overpayments, "have yet to be issued." 

The U.S. Department of Labor stated in February of this year state agencies did not have to recoup funds on certain overpayments where the claimants aren't at fault. 

"The Department anticipates it will begin implementing the first batch of waivers approved by U.S. DOL in the coming weeks," a DES spokesperson said in an email. 

Similar cases

Phil Austin, an attorney in the Valley, has dealt with DES for years. Including representing clients dealing with the PUA benefits. 

"I don't think is anybody purposely is doing this. Just the demand on the bureaucracy is just causing these kinds of issues to develop," Austin said. 

In the cases he's seen, Austin has noticed maybe people weren't as responsive as they should have been to DES, which leads them to be classified as "fraud." 

"So many people are just inadvertently, you know, don't comply with the specific responses," Austin said. "But many do, and their response is somehow not communicated or the like." 

Austin believes it's because federal and state agencies consider the PUA system to have significant issues with fraud, which leaves people getting caught up in fraud sweeps. 

"I told the hearing officer, 'Can't your agents take more care about how they're approaching this, because for the most part, I've seen are people who are innocent, and, again, just suffer from maybe inadvertence, or mistake," Austin said. 

Austin's advice to people when dealing with the PUA system is to make sure to read the fine print carefully and respond in every way you're supposed to. '

"If you're not complying with the requirements, notice requirements, and the like, it's going to read a great red flag of fraud. And and you have to disprove that," Austin said. 

Leaders' response

Beyond DES, 12News also contacted Governor Doug Ducey's Office regarding the latest issues, as Ducey is who appointed Wisehart to take over as director in 2020. However, no response was given. 

Regarding the latest issues at DES, Current Secretary of State Katie Hobbs, who's the Democratic nominee for Governor, sent 12News the following statement: 

“I’m running for governor to make our government more transparent, accountable, and efficient. That means ensuring people have access to the benefits they are entitled to and updating our technology systems to prevent errors and fraud," Secretary Hobbs said. 

12News' emails to a spokesperson for the Republican nominee for Governor,  Kari Lake, went unanswered. 

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