by Michelle Rindels, The Nevada Independent, November 4, 2022
The former head of the state unemployment system says the Sisolak administration “sanitized” public statements about the extent of fraudulent claims bombarding the agency during the height of the COVID-19 pandemic and bypassed experienced staff in creating a strike force tasked with getting rapid results on a backlog.
Kimberly Gaa, who worked for the state for most of a more than three-decade period and served as head of the Employment Security Division from August 2018 through August 2020, said the administration shied away from clearly describing the scope of phony claims flooding the agency. The Department of Employment, Training and Rehabilitation (DETR) estimated it received 10 years’ worth of claims to process in just the first few months.
For months, she said, statements provided to and edited by the governor’s office were stripped of specifics about fraud that was ultimately suspected to be behind hundreds of thousands of the claims. That included statements about as many as half of Pandemic Unemployment Assistance (PUA) claims having hallmarks of fraud at one point, Gaa said, and affirmative denials that DETR had experienced a data breach.
The omissions, Gaa said, were examples of key information edited out by the governor’s office that could have been useful to the public during a period in which the statewide unemployment rate shot to a nation-leading 28 percent and the number of claims filed for benefits topped even the number of Nevadans — about 1.5 million — in the entire workforce.
She also said DETR officials ran into internal bureaucratic hurdles that slowed progress, including hiring paperwork requirements that impeded efforts to ramp up staffing by hundreds of positions during the surge and interagency budget disagreements that delayed upgrades of an antiquated phone system that some individual claimants would call hundreds of times a day before reaching a staffer.
“I knew people were suffering and we were trying everything we could do to help them as quickly as we can and we felt like we’re fighting … a civil war at the same time,” Gaa told The Nevada Independent in an interview last month.
Gaa is the second high-level former DETR executive to publicly criticize the Sisolak administration’s handling of unemployment issues at a time when claims increased exponentially from governor-ordered business restrictions, leaving jobless Nevadans caught in application backlogs clamoring for help. Dennis Perea, who was the acting director of DETR when he resigned in July 2020, also raised concerns with what he described as the administration’s tendency to prioritize optics, saying it was a “no-win situation for everyone … but we could have done better with a little support.”
The governor’s office declined to respond to details of Gaa’s account. But in a prior response, a spokeswoman noted that “Nevada’s small but dedicated staff at DETR was tasked with working in unprecedented times, keeping up with unprecedented demand.”
“The Governor’s Office has been steadfast and firm in working with agencies to remove barriers and create efficiencies to ensure that benefits were expeditiously delivered to Nevadans in need during the worst public health and economic crisis,” said spokeswoman Meghin Delaney.
The Sisolak administration’s management of the state’s pandemic response, including on unemployment, has been the subject of scrutiny during a highly competitive governor’s race. About a half million claimants, or one in every six Nevada residents, received at least one week of unemployment benefits during the pandemic, and many issues that emerged during that time — from appeals of unpaid claims to fraud investigations and a $54 million IT modernization project — remain unresolved two and a half years after the initial jobless claims surge.
Gaa worked as a state employee for all but a short time since 1987. Appointed to lead the division before the pandemic, she assumed a higher profile during the crisis, speaking publicly at numerous DETR and governor-led press conferences during the pandemic that drew widespread viewership and media attention.
She was relieved of her duties in August 2020 as new leadership was announced. Her official termination took effect in October 2020 for reasons she said were not clearly laid out to her, and happened after she declined offers for severance or a 60-day transfer to a job in the state welfare agency if she signed a non-disclosure agreement. DETR Administrator Elisa Cafferata declined to comment about the circumstances of Gaa’s dismissal, citing a policy not to discuss personnel matters. A report issued in January 2021, however, described it as part of a leadership reset that would put DETR on a better path.
Gaa said she wanted to speak out about her experience to corroborate her former colleague Perea’s account. She said the fact that she is now retired and living out of state, and her husband is no longer employed by the state, allow her to speak more freely than she could have in the immediate aftermath of her work with DETR.
‘Heroes coming in’
Gaa said one of her biggest frustrations was that the administration limited what she was allowed to say about a rush of claims into the Pandemic Unemployment Assistance (PUA) program for independent contractors and gig workers, even though DETR officials knew the day they opened up applications to the program in May 2020 that it was the target of a massive amount of suspicious activity.
The agency long kept its comments on the issue vague — a July 2020 press release described a 40,000 PUA claim week-over-week increase as “questionable,” for example — and did not provide numbers to quantify the fraud. It wasn’t until October 2020 that DETR published a press release about its first round of mass denials, indicating that “DETR has identified a large number of questionable claims” and that 270,000 such PUA claims would be rejected.
More than 1.1 million PUA claims had been filed by the end of March 2022, even though DETR staff estimated that no more than 300,000 Nevada workers were eligible. One of the few specifics about the rate of illegitimate claims came in a final report from the strike force, published in January 2021, indicating that out of more than 110,000 claimants who were directed to go through an ID verification process, only 7 percent were validated as legitimate claimants.
Nevada was not alone in facing a sprawling fraud problem in benefits programs that paid claimants double or more each week during the pandemic than in normal times. The Department of Labor’s Office of the Inspector General reported in September that it had opened 190,000 investigative matters related to unemployment fraud, and its caseload on the subject has increased 1,000-fold since the beginning of the pandemic.
But dealing with fraud can be tricky — officials faced pressure both from constituents concerned about the waste if too many claims were paid and the state was too lax on fraud, but also from desperate applicants who felt the state was too quick to use fraud as a reason to delay delivering benefits to people in need.
Gaa, who has a background in information technology and law enforcement, said there were clear hallmarks of fraud from the outset and her agency wanted to get into specifics about fraud numbers earlier than the administration allowed.
“They were worried that somehow it looked like the state was failing in some fashion, but it doesn’t mean the state’s failing. We’re not the bad actors. There’s criminal rings,” she added.
She also said that explaining the rigorous set of eligibility restrictions that can delay processing or prevent payment would have been valuable to Nevadans distressed about why things were taking so long. But every script she read from during widely broadcast weekly Zoom briefings to the media was edited by the governor’s office, she said.
“They didn’t want to say things that we thought were of value to the Nevadans who were seeking why [were] things taking so long,” she said. “Unless that is explained to people, they have no idea what’s going on and we wanted to provide more detail, we wanted to provide more explanation.”
She said the administration and the strike force — a volunteer committee announced in August 2020 that was charged with evaluating DETR’s processes and recommending changes — left high-ranking DETR officials out of key conversations where decisions were made about how to move forward.
Gaa said she was not informed before it was announced in a press conference that a strike force would be brought in to assist DETR in processing of claims. She also was not consulted about where the most glaring gaps were, even after putting in 16-hour days throughout the crisis and having a long history with the state.
“We were the experts. Why not just listen to us?” she said, adding that it appeared “they were interested in making it look like they were the heroes coming in.”
Gaa said many of the changes made since the strike force got involved were a continuation of work DETR had started previously — such as using ID.me to verify claimant identities, IT improvements to allow easier recovery of lost passwords and PINS, and grouping claims by type to allow for quicker “batch” processing.
Chuck Short, a strike force member, told The Nevada Independent he believes the strike force did bring some original ideas to the table, including cross-training welfare employees to process claims, bringing in certain fraud prevention tools from the private sector and streamlining a 40-page document tracking the status of claims into a more useful one-page summary.
Former Assembly Speaker Barbara Buckley, who led the strike force, has also emphasized that strike force members were all volunteers and the hundreds of hours they spent working on unemployment issues and communicating with claimants helped speed up the processing of benefits.
Gaa said DETR’s efforts to improve the claimant experience were stymied by bureaucratic hurdles, including paperwork requirements attached to her request for nearly 500 positions. She said she had hoped the state would have fast-tracked the jobs, reconciling paperwork later rather than requiring it all up front during the emergency conditions — something she said pulled staff from processing claims and likely delayed onboarding by several months.
“They’re like, well, you have to submit this form and this form. I’m like, look, I need 500 people yesterday … you guys figure that out,” she said. “I was hoping for, let’s all come to the table and say you take this, you take this, you take this, and we’ll come back together and reconcile later.”
Gaa, like Perea, said the administration made suggestions that seemed inappropriate, such as setting up centers for Culinary Union members to learn about filing unemployment claims or pushing for more immigrants to receive benefits when the agency was limited by federal regulation — a cross-check on a database called SAVE — on how to determine immigrant eligibility. She said it’s employment history, rather than union membership, that determines eligibility for benefits, so the request seemed like a favor for a group often supportive of Democrats.
“It felt like they were kind of just trying to go a step too far and like maybe give a special treatment to the Culinary,” she said. “Somebody could be still with the union and then be eligible. And then the person sitting right next to them could be with the union in good standing and not be eligible for other reasons.”
Culinary officials have defended their involvement in the situation, pointing to the group’s wide reach in the hospitality sector, which suffered the most in the pandemic. Bethany Khan, spokeswoman for the union that represents 60,000 workers in Nevada, said in response to similar criticisms from Perea that “no organization could have or did accomplish at the scale and scope of what Culinary Union was able to achieve during the pandemic to advocate and win for workers.”
Culinary Secretary-Treasurer Ted Pappageorge, who said DETR’s processes treated claimants like criminals, also pushed back on criticisms of outside entity involvement.
“Every DETR administrator and employee that stayed on to help solve this crisis and was willing to work with community partners like [strike force leader] Barbara Buckley and the Culinary Union deserve a medal for their service and hard work, not a hit piece,” he said in response to Perea’s comments.
Gaa said she’s speaking out because she wants the public to know that rank-and-file staff at DETR were “doing everything to help their fellow Nevadans, period” and “they were doing it at their own detriment, of themselves and their families, because people were getting sick and they were still showing up.”
She also thinks the administration could have handled the crisis better, including by being “more descriptive and much more honest about what we were facing instead of trying to manipulate the narrative.”
“They had an opportunity sooner to listen and to be plain with the challenges and set expectations and they didn’t do that,” she said.