COA says state can halt enhanced unemployment benefits

Editor’s note: This story has been updated as of 4:20 p.m. on Aug. 18.

A decision issued Tuesday by the Indiana Court of Appeals is allowing the state to again stop the federally enhanced unemployment benefits which Gov. Eric Holcomb had tried to end in June, saying the extra money was hurting the Hoosier economy by encouraging workers to stay out of the job market.

The unanimous appellate panel found the plaintiffs in the lawsuit had not shown a “reasonable likelihood of success at trial” and the Marion Superior Court, which issued the preliminary injunction that prevented the state from opting out of the federal program, had abused its discretion.

Holcomb said he was pleased with the ruling.

“I want to thank the Court of Appeals on its ruling to reverse the trial court’s decision on unemployment benefits,” the governor said in a statement. “The state took the appropriate steps to terminate its participation in these optional federal pandemic unemployment programs and this ruling confirms that we had the legal authority to do so.”

However, the decision may have little impact.

The Indiana Department of Workforce Development said the enhanced benefits will be ending Sept. 4, regardless of the court’s ruling. As required by the U.S. Department of Labor, the state has already sent the claimants a 30-day notice that the federal payments will be ending the first Saturday of next month.

“The legal issues at stake in this proceeding are important to our clients and all Hoosiers because unemployment benefits play a vital role in keeping people out of poverty while they look for new employment,” plaintiffs’ lawyers Jennifer Terry of Indiana Legal Services and Jeffrey Macey of Macey Swanson said in a statement. “We are currently reviewing the Court’s decision and conferring with our clients on next steps.”

The plaintiffs had argued Indiana Code § 22-4-37-1 required the state to participate in the enhanced benefits that were coming through the Coronavirus Aid, Relief, and Economic Security Act program. They pointed to unique language in the statute which requires Indiana to participate, in part, in federal benefits conferred under the provisions of 42 U.S.C. 1101 through 1109.

The Marion Superior Court agreed and issued a preliminary injunction that forced the state to restart the extra federal payments.

But in Eric Holcomb, et al. v. T.L., et al, 21A-PL-1268, the Court of Appeals held the state statute does not require participation in the CARES Act program.

The 16-page ruling notes the CARES Act benefits were conferred under different sections of the United States Code than those enumerated in the Indiana statute. Specifically, CARES Act unemployment benefits are conferred under 15 U.S.C. sections 9021, 9023 and 9025, which are not included in I.C. 22-4-37-1. The sections under 42 U.S.C. that are highlighted in the Indiana statute established the system for the federal treasury to hold and transfer monies to the individual states for use in unemployment programs.

“When the CARES Act benefits were created, Congress chose to use the existing accounting system, that was already in place to direct federal funds to the States for use in the area of unemployment, to efficiently distribute funds for the CARES Act benefits,” Judge James Kirsch wrote for the court. “Utilizing this established accounting system and specifying how funds should be moved around and made available for distribution is entirely different from creating a new federal benefit program, which the CARES Act is.”

Holcomb reiterated his stance that Indiana workers no longer need the extra payments that were instituted when the economy stalled early in the COVID-19 pandemic.

“Currently Indiana has more than 143,000 job openings and I know there are even more out there,” he said in his statement. “The Department of Workforce Development continues to work with the unemployed to connect them with resources they need to gain skills and be matched with employment.”

The governor did not address the obstacles that some of the plaintiffs said were keeping them from getting jobs. Those included health conditions that make them especially vulnerable to the coronavirus and problems finding child care.

Tuesday’s ruling comes more than a month after the appellate court denied the state’s emergency motion to stay the preliminary injunction. The two-page ruling, signed by Chief Judge Cale Bradford, did not provide any commentary to explain the decision.

Indiana had already stopped the flow of federal benefits in mid-June, but to comply with this earlier ruling, the state had to resume distributing the extra payments. The CARES Act programs provided an additional $300 weekly benefit, extended the unemployment payments longer than the traditional 26 weeks and allowed assistance to flow to the self-employed, independent contractors and others who normally do not qualify for such support.

In the Tuesday opinion, the Court of Appeals emphasized the federal benefits were always meant to be offered for a limited time and not designed to create long-term changes.

“Congress needed an efficient way to distribute the CARES Act benefits, and such a system was already in place under the statutes enumerated in Indiana Code section 22-4-37-1,” Kirsch wrote. “But utilizing the same system to distribute the CARES Act benefits is not evidence that Congress intended to change or amend the traditional (unemployment insurance) scheme through the CARES Act. The CARES Act is intended to be temporary, provides different benefits to more types of people and for different amounts of time, and serves as a supplement to traditional UI benefits during an unprecedented pandemic.”