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$20M Set Aside To Settle Unemployment False Fraud Suit

October 4, 2022

Article courtesy of MIRS News for SBAM’s Lansing Watchdog newsletter

A settlement has been reached in a class action lawsuit alleging the state falsely accused unemployment benefit recipients of fraud.

Amber McCann, a spokesperson with the Attorney General’s office, said Wednesday the settlement in Bauserman v. Unemployment Insurance Agency is “contingent upon passage of the (budget) supplemental,” which came Wednesday when the Legislature appropriated $20 million for the settlement.

“The parties will provide more details once a settlement has been finalized,” McCann told MIRS.

The settlement follows a July Michigan Supreme Court ruling that held unemployment claimants falsely accused of fraud between 2013 and 2015 could seek financial relief from the state.

The plaintiffs alleged in the 2015 lawsuit that UIA unlawfully intercepted their state and federal tax refunds, garnished their wages and forced them to repay unemployment benefits they lawfully received without providing notice or an opportunity to be heard in violation of the state constitution’s right to due process.

The state acknowledges that upwards of 40,000 residents were wrongly accused of fraud via Michigan Integrated Data Automated System (MiDAS) when it came online in 2013.

Meanwhile, a separate proposed class action suit filed in January by five unemployment insurance claimants remains pending in the Court of Claims. The allegations in that suit are similar to Bauserman.

In that case, a judge put a temporary pause on the state’s collection of overpayments for those claimants appealing the decision.

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