Thousands of Californians Waited Weeks for Disability Payments While EDD Grappled With Fraud

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People walk by the Employment Development Department (EDD) office in San Francisco on July 28, 2022. (Beth LaBerge/KQED)

One morning in March, an undocumented farmworker on the Central Coast got ready to make a phone call she’d made dozens of times before, to a state agency where a human rarely answered.

It had been three months since she’d applied for the partial wage replacement most California workers are eligible for — regardless of immigration status — when they are disabled due to pregnancy or other health reasons.

But Reina, who at the time was six months pregnant, had not yet received a reply from the Employment Development Department on her claim, let alone the money she had counted on to pay rent. The 33-year-old said she was so anxious that she sometimes got headaches and couldn’t stomach food. (KQED is not using Reina’s full name because of her immigration status.)

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“It was so difficult for me and my family,” she said in Spanish, adding that the agency had paid her past State Disability Insurance benefits with little delay when she had her three older sons, now ages 2 to 10. “I never imagined it would take so long this time around.”

That same month, about 300 miles away in Santa Clarita, a frustrated Amanda Butler got in the car with her 2-week-old infant, 4-year-old son and husband. He drove the family nearly an hour to a crowded EDD office in downtown Los Angeles. Like Reina, Butler had tried calling the agency but couldn’t reach a person to explain why she hadn’t received her biweekly SDI payments yet.

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“It’s the last thing you want to deal with when you have a newborn, you are recovering from a C-section and you are having to nurse, like, every hour,” said Butler, 37, who manages fundraising campaigns for the nonprofit BreastfeedLA. “It was stressful.”

Potentially tens of thousands of disabled Californians have been forced to wait several weeks or even months for their benefits after the EDD redirected significant resources to respond to a fraud scheme that hit the agency late last year.

The EDD, which has struggled with outdated computer systems and costly fraud attacks, is still falling short of its own standards for processing benefits for eligible claimants in a timely fashion, while weeding out scammers.

Nearly 18 million California employees are covered by the SDI program through a payroll tax. The program often offers to pay 60% of a person’s wages for up to 52 weeks. A bill to significantly increase the payment rate is advancing in the Legislature.

Since January 2017, the EDD’s own statistics show it has received an average of 60,000 initial claims per month. But that figure more than doubled in December 2021. By January, the agency announced it suspended 345,000 claims it had flagged as suspicious.

The EDD aims to pay 86% of SDI claims within 14 days, as it expects some complex cases to take longer to investigate and resolve. Yet by April, according to new figures obtained by KQED, almost half of disability applications took 15 days or longer to process.

“It’s absolutely unacceptable, and it’s something we need to look at,” said Assemblymember Buffy Wicks, D-Oakland. “We have a social safety net for a reason. It’s to help people who are in need. That is a fundamental social contract the government has with its constituency. So it’s infuriating that this is happening.”

Wicks, who sits on a subcommittee that oversees the EDD’s budget, said she plans to raise the issue with the agency in the next legislative year.

The EDD declined several interview requests by KQED. In an email, an EDD spokesperson said delays have subsided, with close to 30% of claims — about 11,000 — affected by longer processing times as of mid-July.

But in press releases and emails, the agency said suspected organized criminals filed false claims using the stolen identities of medical providers who must certify a disability before the EDD issues payments.

The agency redirected resources to review hundreds of thousands of claims associated with about 27,000 fake medical accounts, and was able to block billions of dollars in fraud attempts, according to a spokesperson.

“The work involved in resolving that fraud attack issue certainly impacted our ability to remain timely with all of our claims at that time,” the spokesperson wrote.

A horizontal bar chart showing the percentage of EDD disability claims from Nov. 2021 - June 2022.
Data provided by the California Employment Development Department. (Chart by Farida Jhabvala Romero/KQED)

'A terrible experience'

It’s unclear whether the agency initially flagged Reina and Butler’s cases as potentially fraudulent, or whether the agency didn’t have enough staff to follow up promptly on their claims.

Butler believes her in-person visit to the EDD’s office in Los Angeles made all the difference. An agency representative told her they had mistakenly believed she’d returned to work when she hadn’t. Once the problem was fixed, Butler’s payments started a few days later. The delay she experienced was about a week, she said.

“I don’t think that they’re set up to really support a new parent, because of all the hoops that they have to go through in order to get paid,” said Butler, who has now returned to part-time work. “I can’t imagine having to wait longer.”

Claimants without valid Social Security numbers like Reina, who is not fluent in English, must file their requests on paper, according to the EDD.

Reina, who had to wait for seven months for her disability payments, struggled to feed her family, often having to stand in line at food banks. By April, she and her husband, also a farmworker whose seasonal work declined, couldn’t pay rent for their small house in Watsonville. The family was saved from falling into homelessness by a last-minute loan from Reina’s sister, she said.

“It was a terrible experience,” said Reina, who remembers longing to buy comfortable maternity clothes, but knowing that she didn’t have the money. “It felt very ugly.”

a mother and her two songs are seen from behind walking down the street
Reina, 33, holds her baby while walking with her two older sons in Watsonville. KQED is not using her full name because of her immigration status. (Farida Jhabvala Romero/KQED)

Prioritizing fraud claims over benefits

Earlier in the pandemic, the EDD delayed payments for roughly 5 million unemployed Californians and improperly denied likely 1 million more while it dealt with a sudden increase in claims and fraud, according to a report released last week by the Legislative Analyst’s Office.

As of last fall, the agency had paid an estimated $20 billion in fake pandemic unemployment relief claims, nearly all of it tied to a now expired federal emergency program that the EDD administered. This summer, state officials announced the agency had recovered $1.1 billion.

But the EDD prioritized eliminating fraud over making sure eligible workers could easily get their unemployment insurance benefits, which caused hardships for Californians in need and held back the state’s economy, the LAO said.

“Our dozen or so recommendations are, in effect, a series of safeguards to ensure that getting workers benefits quickly is a top priority for the state because over the last several decades those safeguards haven’t been in place,” said Chas Alamo, the LAO analyst who authored the report. “And now we are in a position where we got a program that causes a great deal of frustration for workers during downturns.”

This year, legitimate disability claimants received no notice or communication from the EDD for months, according to Lizett Rodriguez Peña, an attorney at the Watsonville Law Center who helped Reina and a dozen more farmworkers navigate delays of on average six months on their claims.

When her clients tried calling the EDD to find out what they needed to do to get their benefits processed, they faced a wall of voicemail, she said. In January, calls to the agency’s disability insurance program surged to more than 5 million, as reported by CalMatters.

Even during her own maternity leave earlier in the year, Rodriguez Peña saw her SDI payments unexpectedly halted.

“I called multiple times and my call would just get disconnected,” she said. “This is why I find it so ironic, because I help individuals go through that, but I was struggling trying to get someone live to talk.”

With new state budget, hope for improvement

An EDD spokesperson said the agency agrees it must better balance the need to prevent fraud with the work of delivering timely payments to eligible workers.

The recently enacted state budget includes $136 million for the agency to boost its customer experience by improving call centers, simplifying forms, developing data tools to curb fraudulent claims and speeding up the pace of application processing, according to the agency spokesperson. The changes, which promise to also add multiple language options for users, are expected to be completed by June 2023.

While almost eight months pregnant, Reina said she spent half a day at an EDD office in San José with documents to help verify her identity.

The agency denied her claim in a letter dated April 22, claiming the strawberry picker had not earned wages to qualify her for SDI benefits, according to Rodriguez Peña. She said she followed up with the EDD, alerting them Reina had submitted proof of wages with her initial application on Dec. 1, 2021.

Finally, on June 21, the EDD reversed its decision and granted Reina disability payments totaling around $10,000. Her doctor had recommended she stop working after her third trimester, partly because Reina’s growing belly hurt too much while bending close to the ground to collect strawberries.

Looking back at the ordeal, the Indigenous immigrant from Mexico said she almost gave up. But she reminded herself that she’d paid SDI taxes with every paycheck.

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“I know they say some people commit fraud. But I was telling the truth,” Reina said. “So why did they take so long?”