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Agency: Lone clerk sat on hundreds of unemployment appeals

A lone clerk in the state's social services agency hid hundreds of unemployment denial appeals requests over more than three years to avoid work rather than filing them with the Arizona Court of Appeals, a state official has told the court.

The missing cases finally came to light late last year when people started calling the Department of Economic Security inquiring about their appeals, the department's appellate services administrator, Marilyn White, testified at a recent hearing. A slew of old cases filed with the court led to an unusual February order that the department immediately file the appeals or face contempt of court proceedings.

White told a three-judge panel that what she originally thought was only a few dozen cases stashed in the appeals board clerk's office continued to grow and now sits at about 300. After the clerk resigned on March 6, appeals filings were found "just all over her office."

"We found some in an in-basket in her office. We found some in a lateral file in her office. We found some in a banker box for a case that the court had long since sent back an order on," White said on April 19. "They were tucked inside another case file. We found some in a file drawer in her desk."

Assistant Attorney General JoAnn Falgout asked White if it would "be fair to say that she was literally hiding them." White agreed.

The clerk was hired in November 2013 and assigned as the chief clerk of the agency's appeals board. Among her jobs was to handle appeals from citizens who were denied unemployment benefits and had exhausted the standard appeal process.

In those cases, the people file another appeal request, and the clerk's role was to gather the file and transcripts of earlier hearings and have them transmitted to the court of appeals.

White said an investigation found the clerk had established an elaborate system where office workers would note the appeal filing in the agency's computer system but place it into a queue that wasn't normally used. They then were told to give the paper copy to the clerk, who stashed it in her office.

The clerk also eventually told her staff to tell callers that it could take up to two years for the Court of Appeals to begin acting on a case. That two-year time frame is what prompted the rash of calls that finally got the agency to discover the missing filings.

Agency spokeswoman Tasya Peterson said Friday that there were problems with the system that allowed one person to sidetrack so many cases.

"There were inefficient processes. There was turnover in staff," Peterson said. "The department needed to shore up its processes, and we feel confident that we have put a new process in place that will remediate this issue moving forward."

The court of appeals is still considering whether to issue sanctions against the department. Several people who were denied benefits and whose appeals were never filed with the court are asking for damages from the agency.

Chief Judge Michael Brown told Falgout at last month's hearing that he was concerned with interest accruing on accounts where people were overpaid.

"We are seeing some staggering numbers on overpayments that are now three, four years old," he said. "And so for these folks to bear interest and ongoing interest running at that level ... it's just a significant number for these folks to have to bear."

Falgout said the agency has the ability to waive interest in those cases. She told the judges last month that while the department is responsible for "an egregious error" it wasn't intentional.

"This rather was a rogue employee who took great pains, concocted an elaborate scheme, to conceal these cases so that she could avoid doing the work assigned to her," she said.

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