AUGUSTA — Federal regulators are auditing unemployment claims at the Maine Department of Labor, Democratic legislative leaders said Wednesday.

The audit began Tuesday, one day after an unemployment lawyer asked the U.S. Labor Department to investigate allegations that Gov. Paul LePage pressured hearing officers at a meeting last month to favor employers over employees in unemployment compensation disputes.

A spokeswoman for Gov. Paul LePage would not confirm the audit Wednesday. Instead, the administration issued a press release announcing that LePage will sign an executive order to establish a commission to investigate Maine’s entire unemployment compensation system.

LePage said in the release that a state investigation is needed because of unspecified “inconsistencies in the unemployment compensation system.”

He said the separate request for a federal review of his March 21 Blaine House meeting with Maine’s unemployment compensation hearing officers was “politically motivated,” and based on anonymous reports published in the media.

The issue is important to businesses because the outcomes of unemployment appeals can affect the contributions they must make to a trust that funds unemployment benefits. The more unemployment claims there are against a business, the more it pays into the trust.

Maine Labor Department records show that in 2012, about 40 percent of workers who were fired for alleged misconduct successfully appealed decisions denying them unemployment benefits. Workers won 511 of the 1,292 cases. The other 781 cases, about 60 percent, were settled in favor of the employer.

The average weekly benefit for Maine workers is $281.

Cases involving fired workers are among those likely to be inspected by the U.S. Department of Labor, which sent two auditors to Augusta, according to visitor logs at the state Labor Department. The auditors met with Laura Boyett, director of the state Bureau of Unemployment Compensation, for more than four hours on Tuesday. They met with Boyett again on Wednesday morning.

Barb D’Amore, one of the federal auditors who signed the log, declined to comment when reached by phone Wednesday. D’Amore referred questions to a federal Labor Department spokesman who did not immediately return a call seeking comment.

D’Amore and the other agent, John Murphy, are from the federal Employment and Training Administration division, which audits unemployment claims. The division was contacted Monday by David Webbert, president of the Maine Employment Lawyers Association, a group whose members specialize in representing workers in unemployment compensation cases.

Webbert requested an investigation of LePage and “other high-level officials” in the administration for violating federal laws that require impartial hearings in appeals of unemployment claims.

A number of unemployment compensation hearing officers were summoned to a meeting with LePage and other administration officials on March 21 to discuss concerns about the appeals process. After the meeting, some of the hearing officers told the Sun Journal that they felt LePage was pressuring them to decide cases in favor of businesses.

The hearing officers were not identified because they requested anonymity, saying they feared retribution if they came forward publicly. Records obtained by the Portland Press Herald under the Freedom of Access Act indicate that at least one of the officers, Wayne Reed, felt political interference.

“In the decades I’ve been doing this work, I’ve never seen anything like it, from either end of the political spectrum,” Reed wrote in an email to the chief hearing officer a day after the meeting with LePage. “For purposes (of) keeping political pressures/bias out of (a) quasi-judicial process with the Maine Department of Labor, these are dark times.”

The administration said it has been contacted by businesses that have expressed concerns about the appeals process, but it denies allegations that hearing officers were pressured to favor businesses.

Hearing officers are lawyers and are granted broad discretion in deciding cases. Documents obtained through the Press Herald’s FOAA request indicate that the administration is focused on the officers’ decisions about what evidence to accept in hearings.

LePage did not detail that concern when he announced he would be naming a special commission to review the unemployment system Wednesday. “But I remain focused on assuring Mainers that there is fair and consistent application of the law throughout the process,” he said. “That’s why I am calling for an all-encompassing investigation of the entire system.”

Webbert, the unemployment lawyer who requested the federal probe, characterized the governor’s announcement as the administration’s attempt to control the controversy.

“They know that only an investigation they control will come out finding that what they’ve done is OK,” he said.

Senate Majority Leader Seth Goodall, D-Richmond, and assistant Senate Majority Leader Troy Jackson, D-Allagash, confirmed that a federal audit was under way in response to a reporter’s question at the party’s regular media briefing Wednesday.

Ericka Dodge, a spokeswoman for Senate Democrats, said Maine Labor Commissioner Jeanne Paquette had told legislative leaders that “the incident prompted the federal officials to come up here,” but they aren’t necessarily investigating allegations yet. She said the federal officials are auditors examining unemployment files.

Goodall praised the federal response.

“We want fair hearings. The pressure that is inherently put on them by the governor’s actions, as alleged, is really disturbing and we know today that people are investigating that,” he said. “That’s important. We need to find out what happened.”

Jackson said the governor and Jennifer Duddy, LePage’s one appointee to the Unemployment Compensation Commission, should be worried. In the records obtained by the Press Herald, Duddy is mentioned repeatedly by the hearing officers for her comments during the lunch meeting.

Webbert had indicated last week that he was also going to request an investigation by Maine Attorney General Janet Mills. However, Webbert said Wednesday that he’d opted for a federal inquiry because the program is audited by the U.S. Department of Labor.

The Maine Attorney General’s Office is aware of the hearing officers’ allegations and is reviewing them, said Timothy Feeley, special assistant to Mills.

Feeley said Mills’ office was available to anyone who participated in the lunch meeting with LePage. So far, however, nobody has come forward, he said.

Jackson indicated during the media briefing that he’d like Mills to get involved.

“The AG is the only one that can get those hearing officers to speak on the record and protect those hearing officers,” Jackson said. “I am absolutely looking at asking the AG to do that eventually if it doesn’t come to pass.”

– State House Bureau reporter Michael Shepherd contributed to this report.

Steve Mistler can be contacted at 620-7016 or at:

[email protected]

On Twitter: @stevemistler

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