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Lawsuit sheds light on disability insurance claim system issues

A 170-page whistleblower lawsuit against California’s Employment Development Department recently obtained by the Los Angeles Times shows that an employee tried unsuccessfully to point out a multitude of problems in the EDD’s new system for letting people file and monitor their disability claims prior to the system’s implementation in the fall of 2012. The employee, whose job was to ensure that the agency’s new software would work as designed, notified his bosses multiple times prior to the launch that the new system was “riddled with errors.” He was removed from the project just before the system’s launch.

His warnings proved to be accurate, however. The claims backlog for injured employees got worse instead of better, and it had to be handled manually. The percentage of disability claims processed on time dropped from about 90 percent to approximately 60 percent after the implementation, and it stayed at that level for months. The agency has not reported the number of people impacted.

Correspondence and other documents in the whistleblower suit reveal that people high up at EDD were aware of potential problems, even though they have claimed they were not. The suit also implicates Deloitte Consulting, the company contracted to implement the new system. According to the whistleblower, Deloitte did not provide qualified people to man the project despite being obliged to do so by its contract with the state.

Even with the problems of the 2012 implementation assuaged, this has not marked the end of delays for the many thousands of Californians who rely on the EDD. A problem with another of Deloitte’s computer systems held up unemployment insurance payments to approximately 150,000 Californians, and some say they are still experiencing delays.

Californians rely on state-provided insurance to help them pay their bills, buy food, and keep a roof over their heads during tough times. If they cannot count on receiving their insurance benefits in a timely manner, they must dip into their savings, provided they even have any. At least two state representatives are calling for a full audit of the EDD to try to get to the bottom of these problems that are having a serious impact on thousands of Californians.

Source: The Los Angeles Times, “Whistle-blower warned EDD bosses about glitches in software upgrade” Ricardo Lopez, Jan. 09, 2014

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