UIA Director Testifies In Oversight Subcommittee About $8-$15 Billion In Fraud During COVID-19

The House Oversight Subcommittee on State and Local Assistance Programs heard testimony from Michigan Unemployment Insurance Agency (UIA) Director Jason Palmer over the agency’s handling of pandemic-era unemployment benefits, which resulted in an estimated $8 to $15 billion in overpayments.

The meeting focused on two reports from the Office of the Auditor General (OAG) that detailed widespread fraud, mismanagement, and systemic failures within the UIA during the COVID-19 pandemic. Palmer, who took over the office just 86 days prior, acknowledged the agency’s past failures and pledged full cooperation with the committee to prevent future fraud.

“I own it now,” Palmer said, affirming his commitment to reform, despite not leading the agency during the time of the problem.

“We are building an agency that doesn’t just react to crisis, but delivers reliably every day,” said Brett Gleason, chief operating officer of the UIA.

The committee scrutinized the UIA’s decision to disable its “Fraud Manager” software early in the pandemic, a move that coincided with a surge in fraudulent claims. According to the Deloitte audit cited during the hearing, the agency saw a $2.5 billion drop in likely impostor claims after the system was reactivated.

Palmer confirmed that the agency is now using a multi-layered fraud detection system, including identity verification through federal databases, cross-matching with incarceration and death records, and partnerships with law enforcement. He also highlighted the upcoming launch of “MIUI,” a modernized system designed to enhance fraud detection.

Rep. Steve Carra (R-Three Rivers) expressed frustration over the scale of the mismanagement. He called the agency’s actions “reprehensible,” suggesting that the UIA itself had enabled organized fraud. “You don’t put brownies on the table and tell a three-year-old not to eat them,” he said, criticizing the lack of safeguards.

The committee also questioned the agency’s waiver policies, which allowed over $60 million in overpayments to be forgiven to date. Palmer emphasized that future waivers would be issued only in accordance with the Michigan Employment Security Act.

One of the most alarming findings from the OAG’s reports discussed was the $60 million paid to incarcerated individuals, the deceased, and residents of long-term care facilities between Jan. 2020 to Oct. 2022. An additional $177 million was paid to individuals aged 15 and under or over 80, raising further concerns about eligibility verification.

Gleason assured lawmakers that the agency has since automated cross-checks to prevent such errors and is working to recover funds where possible. However, Gleason noted that a court injunction had paused collections.

As the meeting concluded, Chair Jason Woolford (R-Howell) emphasized the need to break the cycle of leadership turnover and bureaucratic failure, noting that there have been 12 UIA directors in 12 years.

“We’ve got to stop letting this happen,” Woolford. said. “This is about accountability.”

Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter

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