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UIA to refund $20.8M after nearly 70% fraud cases overturned

August 15, 2017

Article courtesy of MIRS News Service

The state’s Unemployment Insurance Agency (UIA) announced Friday it’s in the process of refunding $20.8 million to people who were wrongly determined to have committed unemployment fraud.

The UIA made the announcement after the completion of its “top-to-bottom” review of its operations, which included a review of cases between October 2013 and August 2015, when fraud was alleged and its computer system was involved in some way.

The review consisted of 62,784 cases in that two-year timeframe where fraud was alleged and a penalty assessed, but no appeal was sought. The 62,784 cases represent 49,910 people. 

Of those cases, there were 40,195 cases that had been resolved by the UIA’s computer program — the Michigan Data Automated System, or MiDAS — and the UIA determined 85 percent of those fraud findings had to be reversed. 

When there were cases initiated by the computer system but then referred to an investigator, 44 percent of the fraud findings in those 22,589 cases were reversed. 

All told, there were 43,928 fraud determination cases that had to be overturned, or 69 percent of the cases reviewed. 

The UIA had pledged to review the remaining cases that had made fraud determinations that included some level of involvement of MiDAS. U.S. Rep. Sander Levin (D-Royal Oak) had called for a full review after an initial review from the UIA turned up a 93 percent error rate.

The $20.8 million the UIA will be refunding is coming from a mix of the trust fund and the penalty and interest fund, UIA spokesperson Dave Murray said. 

The UIA’s penalty and interest fund has grown in recent years, which has also been connected to MiDAS and its fraud determinations and resulting penalties collected. 

Two years ago, the House Fiscal Agency found the fund had ballooned from $3.1 million to $102.5 million in four years’ time.

In the most recent budget, $68 million was being used out of the Unemployment Insurance Fund, still leaving the fund with more than a $100 million balance.

House Democrats Friday called the UIA’s intention to refund $20.8 million a “small step to correct the mistakes it made.” 

“Hardworking Michiganders who lost their jobs saw their hardship compounded when their state falsely accused them of lying about it,” said House Minority Leader Sam Singh (D-East Lansing) in a statement. “Many of them were slapped with fines and penalties. These families had to go to court to seek justice, and the state fought them every step of the way. The small step taken today to rectify this issue is not nearly enough to make everyone impacted by this fiasco whole.” 

The House Democrats said the state didn’t provide any transparency on how the state arrived at the $20.8 million figure, and they said the refunds don’t include additional costs like late payment penalties and court costs that were incurred by the affected families. 

Senate Minority Leader Jim Ananich (D-Flint) said Friday he wouldn’t be “patting anyone on the back for this one.” 

“Families went into bankruptcy, marriages were ruined, and properties were lost because residents, by no fault of their own, were robbed by the Snyder administration,” he said in a statement. 

The Michigan AFL-CIO released a statement saying the refund is “just not enough to repair the damage” and that the state “has an obligation to repay every single penny they stole from these workers, and they should repay them with interest.” 

Besides the refund amount and the updated total on false fraud reversals, the UIA also announced a number of other improvements it has undergone. Those include reviewing the letters it sends to residents and employers in an effort to improve its communication, and seeking outside help to review its work and processes. 

“We took action after a hard look at every aspect of Unemployment Insurance, fixing the problems with guidance from national experts, people who use our system and our own staff who work with our residents each day,” said Wanda Stokes, director of the state’s Talent Investment Agency (TIA), which oversees the UIA. 

Stokes was installed at TIA last summer, and since then she replaced former UIA Director Sharon Moffett-Massey with Michelle Beebe.

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