Jan 9, 2017
On January 5, the State of Michigan removed the director of the Unemployment Insurance Agency. An agency spokesperson announced a “top-to-bottom review.”
The state admitting to problems was a dramatic reversal. Ever since 2013, thousands of applicants for unemployment benefits have had their wages and tax returns wrongly seized over false fraud accusations. One distraught claimant reportedly committed suicide.
Previously Michigan’s attorney general had fought to dismiss a class action lawsuit brought by the unemployed, claiming no harm had been done to them.
Problems for the unemployed began when Michigan implemented a new computer system in the fall of 2013. An automated program called MiDAS started wrongfully convicting unemployed applicants of fraud. What the computer was calling “fraud” were mostly typing and clerical mistakes. Making a bad situation horrible, one third of employees in the Unemployment Agency were laid off – right before this automated program went on line. So there was not enough staff to deal with the massive errors the new program was generating.
Over time, the unemployed began to fight back. They got legal help and they were able to get media attention. Their efforts led to investigations. A state audit last year and a federal audit this year both found the same thing. The computer was wrong 93 percent of the time! Almost all of the unemployed who were fined up to 400 percent and faced aggressive collections were innocent.
According to a state spokesperson, in 2,571 cases, Michigan has now refunded money adding up to 5.4 million dollars.
But according to news reports, more than 50,000 cases of wrongful fraud determinations were made before the state stopped using the automated MiDAS system.
The massive fraud that DID happen was NOT the unemployed filing false claims but Michigan seizing wages and tax returns from as many as 50,000 innocent unemployed workers!
Where is ALL that wrongly seized money? According to Fox 17 News in West Michigan, at least 150 million dollars is sitting in the “Unemployment Insurance Agency Contingent Fund” – largely from these penalties.
And in related news, Michigan’s Governor Snyder has a bill sitting on his desk that would use 10 million dollars from the “Unemployment Insurance Agency Contingent Fund” to plug a hole in the state budget. THAT money belongs to the wrongly accused unemployed. Give it back now!