Judge dismisses lawsuit over Iowa ending COVID benefits early

A U.S. District Court judge on Friday dismissed a class-action lawsuit over Iowa Gov. Kim Reynolds’ decision to end pandemic-related jobless assistance to roughly 30,000 Iowans early.

Lawyers for Karla Smith of Pleasantville and Holly Bladel of Clinton filed a lawsuit in U.S. District Court for the Southern District of Iowa claiming the two women and other Iowans were illegally denied unemployment benefits in 2021 due to the actions of Reynolds and Iowa Workforce Development Director Beth Townsend.

Reynolds announced in May 2021 that Iowa Workforce Development would terminate the state’s participation in pandemic-related unemployment programs wholly funded by the federal government, effective June 12, 2021 — approximately 12 weeks before the programs were set to expire.

Iowa was one of about 25 states, all led by Republican governors, that chose to terminate the federal pandemic-related unemployment assistance before the programs expired in September 2021. Iowa and other states did so largely in response to labor shortages, claiming the enhanced benefits were encouraging people to remain unemployed rather than return to the workforce.

“During the pandemic, the federal government attempted to pay able-bodied people to stay home instead of seeking employment to keep our economy on track,” Reynolds said in a statement Friday.

“Republican governors around the country stood up to protect the livelihoods of our citizens, getting people back to work when it was desperately needed. In Iowa, we value hard work and recognize the dignity a good job can bring. I appreciate the court’s decision.”

Lawsuit arguments

Lawyers for Smith and Bladel argued in court filing that Reynolds and Townsend violated Iowa law, which requires the state to “cooperate with the United States Department of Labor to the fullest extent” to secure and make available to Iowans “all advantages available under the provisions of the Social Security Act that relate to unemployment compensation.”

Download: Amended complaint -- class action COVID benefits lawsuit.pdf

They argue Reynolds’ decision to prematurely end the pandemic-related jobless assistance deprived Smith, Bladel and other Iowans of “life-sustaining benefits,” and “constituted an unlawful exercise of executive authority.”

They sought class-action status in an effort to recover federal funds they allege the state illegally withheld for thousands of Iowans they allege were harmed by Reynolds’ decision.

Smith and Bladel, in court filings, say they were not provided adequate notice and were not given a hearing or opportunity to contest the termination of their jobless benefits.

The pair claim eligibility letters they received outlining their benefits under the federal government programs “vested them in a constitutionally protected property interest of which they could not be deprived without due process or just compensation.”

In March 2020, at the outset of the COVID-19 pandemic, Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act to address mass layoffs, business closures and soaring unemployment.

The act extended and provided enhanced unemployment benefits to workers who had exhausted or were otherwise ineligible for regular unemployment insurance benefits.

Smith and Bladel’s attorneys stated in filings that termination of the pandemic benefits left the pair unable to cover basic living expenses, such as housing, utilities, food, health care and child care.

Smith worked at a convenience store when the pandemic hit. She stated in the lawsuit her doctor told her a preexisting lung condition made it dangerous for her to continue working in a retail setting that had yet to install plexiglass dividers at workstations and didn’t require face masks.

Smith said she quit her job to self-quarantine and began collecting emergency unemployment benefits of $408 per week in addition to benefits to pay for food, housing and other monthly expenses.

Reynolds’ and Townsend’s decision to terminate Iowa’s involvement in the federal programs left Smith without a critical source of income just as the Delta variant surged, the lawsuit claimed.

Bladel worked for a restaurant and gas station and stated she was replaced after seeking time off to care for an elderly relative who was immunocompromised and at risk for COVID-19. She began collecting benefits used to buy food and pay for other expenses until Iowa terminated its involvement.

Ruling notes state control

Chief District Judge Stephanie Rose dismissed the claims, noting that participating in the federal CARES Act program was optional for each state.

Additionally, Rose stated, Smith and Bladel were not entitled to and cannot establish a property right to the pandemic-related benefits.

“Despite their repeated assertion that the pandemic-related unemployment insurance benefits bestowed a statutory entitlement, they can point to no language in the CARES Act to support their position,” Rose wrote in her order. “ … The Supreme Court has rejected the notion that every government benefit is a property interest of its recipient.”

Download: CARES Act Ruling 5.10.24.pdf

Additionally, the court order notes eligibility for unemployment insurance is determined weekly in Iowa and was not altered by the CARES Act.

“Accordingly, plaintiffs could not have had ‘entitlement through a date certain’ if there were other contingent factors,” the ruling stated.

A footnote included in the judge’s order dismissing the case also states “the decisions to terminate the pandemic-related unemployment insurance benefits after COVID-19 vaccines became widely available do not ‘shock the conscience.’ ”

“Any alleged violation of the law occurred nearly three years ago. … If plaintiffs desired an injunction to prevent the state from withdrawing its participation, they had an opportunity during the 30-day notice period required by the CARES Act,” Rose wrote. “The request for an injunction (is) untimely.”

An attorney for Smith and Bladel did not immediately return a message seeking comment Friday.

Comments: (319) 398-8499; tom.barton@thegazette.com

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