Lansing — The Michigan Unemployment Insurance Agency made nearly 48,000 false fraud accusations against jobless claimants over a roughly two-year period and is in the process of refunding affected residents more than $20.8 million.
The Michigan Talent and Investment Agency, which oversees the unemployment division, announced Friday it has completed an extensive review of fraud determinations made between October 2013 and August 2015 and reversed 43,928 cases. Another 4,058 determinations were overturned through a traditional appeals process.
The agency reviewed 62,784 unemployment fraud accusations that involved nearly 50,000 people, and 4,955 cases were resolved through appeals. The original determinations were processed, in part or full, by an automated computer system.
The false fraud scandal has clouded Gov. Rick Snyder’s administration since at least late 2016, when the agency reversed an initial batch of 20,965 determinations made by the computer system during a review first requested by U.S. Rep. Sander Levin, D-Royal Oak.
All told, the state has now reversed 85 percent of the 40,195 fraud determinations made by an automated computer system without any human review. Another 22,589 fraud complaints were initiated by the computer program but referred to a human investigator. The state reversed 44 percent of those cases during its latest review.
“After intense pressure, we are seeing some progress in addressing a huge scandal that left tens of thousands of Michiganders wrongly accused of fraud by a deeply flawed system,” Levin said in a Friday statement, noting he has additional questions about the fraud claims and penalties.
Talent Investment Agency Director Wanda M. Stokes, appointed by Snyder to the post in July 2016, reassigned the unemployment agency’s director in early January and announced a series of internal changes.
“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,” Stokes said in a statement announcing the results of the new review.
“Our top priority is helping our state residents, making sure they are treated fairly and get the benefits they need during a stressful time. Our initial focus was on a painstaking review of all the cases in question so we have the clearest picture of what we have to do to make things right and restore public trust in the system.”
As The Detroit News previously reported, the false fraud accusations were compounded by large fines and penalties. In addition to demanding repayment of the original benefits, the state automatically slapped many claimants with a 400 percent penalty, plus interest.
Jennifer Lord, lead attorney in a potential class-action lawsuit against the state, said she does not think the $20.8 million in refunds announced Friday go far enough to fully compensate wrongly accused people who suffered financial harm when their income taxes or wages were seized.
“I think this is a limited, positive step forward,” Lord said, noting some claimants have contacted her firm to say they received a refund, but not for the full amount including principal. “I have some big concerns that the math doesn’t seem to add up to me.”
The agency said Friday most of the cases reversed during the latest review involved residents who received benefits they were not entitled to but did not intend to commit fraud. In some cases, an employer reported quarterly wages to the agency, which later discovered that income was not earned during the weeks the individual filed for benefits.
Lord called for greater transparency, arguing “we really need to see more than a press release” to restore public confidence in the system.
“Show us the numbers,” she said. “Let the public see what happened here. How many individuals were paid benefits through no fault of their own, and how many were the true false fraud, where they were entitled to benefits and on top of it were accused of fraud?”
The Michigan Court of Appeals in July dismissed the lawsuit filed on behalf of unemployment claimants accused of fraud, ruling plaintiffs had not filed within six months “following the happening of the event giving rise to the cause of action,” as required in suits seeking financial damages against the state.
Lord said her firm expects to appeal later this month to the Michigan Supreme Court.
The Talent Investment Agency in July asked district courts to dismiss 186 bench warrants issued against residents who were accused of unemployment fraud and failed to appear in court, citing the ongoing review now completed.
Stokes has detailed a series of changes in the unemployment agency this year and in May brought on new director Michelle Beebe, who had worked with the Utah Unemployment Insurance Division since 2008 and led it since December 2014.
“My approach moving forward is to focus on the problems and fix them, not to place blame or take credit,” Beebe said. “We are improving communication, enhancing program integrity, strengthening service delivery, and making for a quicker return to employment for people who have lost their jobs.”
But Senate Minority Leader Jim Ananich, D-Flint, refused to pat “anyone on the back” for Friday’s announcement, arguing the state was slow to respond to concerns his office began hearing about nearly four years ago.
“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,” Ananich said in a statement. “Governing is about people, not profits, but it doesn’t seem that this disastrous administration will ever understand that.”