Indiana files appeal in federal pandemic unemployment case

State officials have filed an appeal in an ongoing attempt to withdraw Indiana from federal programs that expanded unemployment benefits during the pandemic.

Republican Gov. Eric Holcomb and Department of Workforce Development Commissioner Fred Payne argued in their court filings Monday that a Marion County judge “abused” his discretion last month by ordering Indiana to resume participation in the benefit programs while a lawsuit is still pending.

The appeal further maintained that Indiana is not required to participate in the federal programs, and that the governor can withdraw the state from the programs at his discretion. At least 25 other states have also decided to withdraw from the federal programs early.

“The Governor made a quintessential policy determination that continued participation in federal CARES Act programs was now harming Indiana’s economy more than those programs were benefitting it,” the state argued in court filings. “Yet a single trial judge determined that the Governor’s policy determination was unlawful … .”

Indiana on Friday resumed making the $300 federal unemployment payments to workers affected by the coronavirus pandemic after an appeals court ordered it to do so. Officials said the state also restarted its participation in a federal program that makes gig workers and the self-employed eligible for assistance for the first time and another that provides extra weeks of aid.

The payments were the first to be paid since mid-June and came more than a month into a legal battle over the state’s participation in federal programs that expanded unemployment benefits during the pandemic.

Holcomb, who has pushed to drop the state from the federal programs before they’re scheduled to end on Sept. 6, announced in May that Indiana would reinstate a requirement that those receiving unemployment benefits would again have to show they were actively searching for work as of June 1 and that the state would leave the federal programs effective June 19.

Marion Superior Court Judge John Hanley granted a preliminary injunction in an ongoing lawsuit filed June 14 by two legal organizations, ruling that the state must temporarily resume participation in the federal government’s programs that provide unemployment benefits during the pandemic.

In his order, Hanley said Indiana’s decision to leave the federal program early violates state law, adding that the unemployment benefits are “instrumental in allowing Hoosiers to regain financial stability at an individual level while the state continues to face challenges presented by the COVID-19 pandemic during its return to normalcy.”

The state attorney general’s office asked the Indiana Court of Appeals to quickly stay Hanley’s order, arguing that the state couldn’t continue paying the benefits because it had already ended its agreement with the federal government to administer the federal programs. The state also argued that it wouldn’t have time to withdraw from the federal programs again should the appeals court rule in its favor.

The appeals court upheld Hanley’s order on July 12, however.

In their lawsuit filed in June, the plaintiffs assert that Indiana Code § 22-4-37-1 mandates that the state accept all unemployment benefits offered by the federal government. Holcomb’s decision to stop accepting the extra jobless support offered through the CARES program violated a law that is unique to the Hoosier State, they argued.

However, Indiana countered that the statute does not impose a mandatory duty on the state.

In particular, Indiana argues the statute does not require the state to secure all available benefits available under federal law for Hoosier employers and employees.

Moreover, Indiana contends the statute cannot mandate that the state accept the enhanced benefits because that money is offered as part of the CARES Act programs, which are independent of the traditional federal-state unemployment insurance program.

Officials at the Department of Workforce Development said the agency issued 25,000 payments totaling more than $33 million on Friday and expect to make thousands of additional payments this week.

Should the state prevail in its appeal, Payne said claimants wouldn’t be asked to return payments.

The $300 payments more than double Indiana’s average $280 weekly unemployment payment, which has a maximum of $390 a week.