As most of our readers know, many unemployed workers who filed Unemployment Insurance (UI) claims between 2013 and 2015 using Michigan’s online Michigan Integrated Data Automated System (MiDAS) were later informed, wrongly, that the UI benefits they received were fraudulent and that they owed thousands of dollars in benefit repayment plus interest and large penalties. The notices did not provide information as to the reason for the fraud determination, and some workers did not realize they had been accused of fraud until their wages or tax returns were garnished.
An internal investigation by the agency revealed that more than 44,000 determinations of fraud since 2013 were false determinations, meaning there had been in fact no fraud committed in those cases and the claimants were wrongly accused. Of the fraud determinations done entirely by computer, 93% were false—a breathtaking error rate! Yet despite initial PR efforts to blame the problem on “computer glitches,” further investigation showed nearly half of determinations reached with some human involvement were false as well. The fact that the false determination scandal was a structural problem and not just a technical problem was further underscored by revelations of the “guilty until proven innocent” questionnaire through which claimants could respond to fraud determinations, which included questions that could be seen as self-incriminating.
Moreover, as if falsely accusing residents of fraud were not enough, Michigan was shown to have the highest penalties in the nation for UI fraud. Federal law requires that claimants who commit fraud must pay the amount overpaid to them plus a 15% penalty, but many states have enacted higher penalties. Michigan’s penalty is by far the highest at 400% of the amount overpaid; someone accused of having fraudulently received $1,000 in overpaid benefits would owe the state $5,000 in repayment and penalties. The victims of the structural dysfunction at Michigan’s Unemployment Insurance Agency were charged much more than they would have if they were falsely determined to have committed fraud in another state.
For many workers accused of fraud who had done no wrong, the false determinations and the efforts by the state to collect the money resulted in a terrible avalanche of consequences: family stress, ruined credit, bankruptcy, foreclosure, homelessness, and even suicide.
Rep. Joseph Graves convened a task force made up of claimant advocates, organized labor, business groups and legislative staff to develop a package of bills to make sure the false fraud determination travesty never happens again. After many, many hours of work and deliberation, the task force produced a package that passed the House unanimously last month and was passed unanimously on November 30 by the Senate Oversight Committee. From there it will go to the full Senate as soon as next week, where we hope it will pass without amendments and go to Governor Snyder’s desk to be signed into law.
Please learn about what these bills will do here and here, and then call your state senator’s office and tell the staff person that you would like your senator to support the package of bills without amendments. We ask that the bills be passed without amendments because the task force was made up of many points of view and difficult compromises had to be made to reach agreement on a bill expected to be favorable to all parties. Amendments tacked onto the bills could tip the balance and poison the well, jeopardizing passage of the entire set of bills.
If you do not know who your Michigan senator is, you can find out here.
You can find your Michigan senator’s contact information here. (Calls to your senator’s office are more effective than emails.)
Readers who have been wrongly accused of fraud and need legal assistance can find help here.
— Peter Ruark