Bill bars sale of hearing notices to lawyers
Published August 22, 2014
by Richard Craver, Winston-Salem Journal, August 21, 2014.
The General Assembly passed a bill Wednesday that bars the N.C. Division of Employment Security from selling to law firms confidential hearing notices of unemployment benefit appeals, a move seen as critical to the agency continuing to get federal money.
About $58 million in annual federal funding to the Employment Security potentially is at stake. The money is the division’s sole source of operating funds
But whether Senate Bill 42, which is expected to be signed by Gov. Pat McCrory, actually sticks may come down to a Wake County Superior Court ruling next week in a lawsuit filed by a law firm that alleges not allowing access to the notices would hurt its business.
Dale Folwell, the assistant secretary for Employment Security, said the issue of the hearing notices surfaced in February when he was told his office had a security breach — that the law firms' couriers who were collecting the packets were going to the building’s loading dock and bypassing security.
Folwell's proposed response was to make the packets available to any law firm interested in them for double the current monthly fee, or $600, and mailing them out potentially just three times a month.
In March, U.S. Labor officials sent a cease-and-desist letter to Employment Security, saying that providing the notices to law firms violates federal privacy and confidentiality laws, and that continued violation could jeopardize its funding.
Around the same time, a law firm, Wilson Law Group PLLC, filed suit, claiming without having the daily notices available, law firms “will not be able to inform claimants that their services are available prior to the scheduled hearing, which will cause immediate and irreparable harm to their business.”
A preliminary injunction in the Wilson case was issued March 13 in Wake Superior Court that prohibited the division from halting the release of the notices.
In June, the state Appeals Court agreed to the agency’s petition for a stay until next week’s hearing.
“The passage of this law ensures that we remain in compliance” with federal labor regulations, Folwell said.
Monica Wilson of the Wilson Law Firm could not be reached Thursday for comment about the passage of the bill.
“Our agency always tries to respect authority, and we thank the General Assembly for removing this agency from a legal rock and a hard place. The passage of this bill ensures us that going forward, we are able to fully protect our employers’ and claimants’ confidential information.”
However, Folwell acknowledges the bill is not an end-all to the issue, but “it will be a factor” in the hearing.
One example of why Folwell is cautious about the potential law’s future is that a Superior Court judge on Thursday overturned a state law that awards taxpayer-funded vouchers to low-income families who want to send their children to private or religious schools.
For more than 10 years, law firms have been able to pay $300 a month to obtain UI appeal hearing notices on a daily basis.
The notices are for claimants denied benefits in the initial review. They contain claimant information, including addresses, phone numbers, truncated Social Security numbers, and the reason for the employment determination.
The law firms were able to make client solicitations the same way they offer services to motorists involved in a traffic accident or violation. Altogether, more than 700,000 notices have been obtained by the law firms.
Folwell said in many instances, claimants and employers are notified of their hearing dates before the agency could tell them.
Monica Wilson, according to Folwell, is making a key part of her solicitation pitch that she is a former state Employment Security hearing officer. She claimed in her lawsuit she had the permission of a now-former agency general counsel to have access to the daily hearing notices.
In the lawsuit, Wilson claims that without having the daily notices available, law firms “will not be able to inform claimants that their services are available prior to the scheduled hearing, which will cause immediate and irreparable harm to their business.”
Sen. Bob Rucho, R-Mecklenburg, said in March “it is egregious that an attorney can get information before the affected claimant or employer, and that they are able to make money off someone's unfortunate situation.”
