Judge orders Michigan to stop collections relating to alleged unemployment insurance fraud
By
Debra Watson and Zac Corrigan
13 January 2017
A federal judge Wednesday ordered Michigan’s Unemployment Insurance Agency (UIA) to stop collecting money from claimants accused of fraud. The order was the result of a lawsuit filed in federal court. The ruling covers the period October 1, 2013 to August 7, 2015.
Tens of thousands of laid off Michigan workers lost millions of dollars of income resulting from a ruthless and vindictive campaign by state officials in UIA over a two-year period. According to a new report, from October 2013 until October 2015 state officials used aggressive collection policies to deny or take back legally mandated benefits paid out to 50,000 unemployed workers.
On top of being forced to return much-needed income, unemployed claimants were accused of civil fraud and assessed penalties as high as 400 percent. Often without notice, their tax refunds were seized or, in cases where recipients had found work after a layoff, their wages garnished.
The two-year dunning nightmare began when a newly installed computer system at UIA named MiDAS flagged, in error, a total of more than fifty thousand individual unemployment claims as fraudulent.
The computer was used to go back as far as 2007, thus capturing funds from claims granted during the worst years of the recession. The number of claims was high at that time, a period when official unemployment in Michigan was in the double digits.
Late last year a belated investigation, conducted by UIA officials themselves, reviewed 22,427 benefit denials that were the basis for fines and benefit recaptures. These encompassed cases in which claims were automatically rejected and prosecuted solely as a result of being…