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$84M Clawed Back From Fraudulent Unemployment Claims

February 23, 2021

The Michigan Unemployment Insurance Agency (UIA) clawed back approximately $84 million in benefit payments due to suspected fraud during the unprecedented demand for benefits this past 11 months, a Senate committee was told Wednesday. 

At the Senate Economic and Small Business Development Committee meeting, Acting UIA Director Liza Estlund Olson said the majority of likely fraudulent claims are filed under pandemic unemployment assistance.  
 
When it comes to notable cases, Estlund Olson mentioned a woman named Misty, an imposter who submitted copies of a falsified Social Security card, a passport, and a selfie of her holding the documents.  
 
The victim that Misty was pretending to be lived “in a different state entirely,” and Misty called the Michigan UIA’s call center 39 times, asking why she had not been cleared.  
 
“She consistently hangs up when our agents begin asking questions,” said Estlund Olson, explaining that she used a stock photo from the internet for the passport and a telephone number for the Social Security number.  
 
She said the agency is subjected to “many, many versions of Social Security cards that have been tampered with.”  
 
“Some of them are very obvious, some of them very subtle and it takes a very good eye,” she said. “We have to spend all of this time to make sure that we are either paying or not paying somebody appropriately.” 
 
When the UIA requires individuals to submit a photo of them to verify their identity, one can see that they have changed their hair or face to try to match who they are posing to be and have attempted to photoshop their selfies, she said. 
 
Federal programs account for $24 billion of the $29 billion of the total benefits paid to workers since March, Estlund Olson said. “These programs do not impact the health of the Michigan Unemployment Trust Fund because a vast majority of potential fraud involves federal programs with little to no impact on the trust fund.”  
 
According to her, Michigan continues to have one of the healthiest trust funds in the country at $600 million available for unemployment benefits at the beginning of this month.  
 
Additionally Thursday, the Michigan UIA announced it was “highly unlikely” that the agency would be needing to borrow federal funds to cover benefits in 2021.  
 
Since March 15, 2020, $5.1 billion has been paid in state unemployment benefits.  
 
“We have far outpaced even combined totals of larger states like New York, Ohio and Texas. Congress is debating legislation that will extend benefits to our independent contractors and self-employed workers,” Estlund Olson said.  
 
The UIA attributed the announcement to current unemployment claims activity and economic conditions. The agency said Michigan has “one of the healthiest trust funds in the nation” and has yet to borrow. 
 
“A key reason for the continued health of the trust fund is our successful Work Share Program,” said Estlund Olson, in a statement. “Work Share saved the UITF over $80M and helped inject over $500M into the economy when you include the federal benefits paid to these workers.” 
 
The federally funded Work Share program allows job providers to retain their skilled workforce, avoid layoffs, or bring back workers at reduced hours while employees collect partial unemployment benefits to make up for their lost wages, according to the UIA. 
 
Also, Estlund Olson said now is the time for the State Legislature “to do what’s necessary to help workers who need emergency financial assistance.” The requests included restoring the maximum number of benefit weeks to 26, which was the statute from 1963 to 2012.  
 
“Michigan is an outlier (as) one of only eight states that do not provide the federally recommended 26 weeks of benefits,” she said. “In many instances, states without 26 weeks lose out on additional federally extended benefits, and without legislative action, workers won’t be able to access six weeks of benefits that will help them pay for rent, medical bills and put food on the table.”  
 
COVID-19 related UIA eligibility provisions are set to expire at the end of March. According to Estlund Olson, legislative action would be needed to maintain eligibility for individuals who are self-isolating and quarantining.  
 
Chair Sen. Ken Horn (R-Frankenmuth) said he was a little bit taken aback by the “sales pitch for 26 weeks” given the $220 million General Fund boost to the UI Fund was vetoed by the governor. 
 
He suggested UIA get to the bottom of the hundreds of millions of dollars in potential fraud claims the agency suspects that’s on top of the $84 million clawed back before a discussion about a permanent extension to 26 weeks is had. 

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