LANSING - A package of bills that would restore lost income, fees and penalties to people falsely accused of unemployment insurance fraud was introduced last month by Democrats in the state Legislature. Republicans are looking at fixing the mess, too.
“Families across the state have been harmed by a state Unemployment Insurance Agency that falsely accused them of fraud and punished them with wrongful fees and penalties,” House Democratic Leader Sam Singh (D-East Lansing) said. “Our governor claims to treat citizens as ‘customers,’ but this has to be one of the worst examples of his customer service yet. This scandal has had families go into bankruptcy while some employers have evaded paying into the system with limited consequences."
The Michigan Department of Talent and Workforce Development, which oversees the UIA, said the agency falsely accused tens of thousands of Michiganders of fraud, costing them not only benefits, but fees and penalties as well. The false allegations cost the average victim thousands of dollars. Problems with the agency continue, and just last month, the UIA revealed that it may have exposed the private information of nearly 2 million people in Michigan.
Singh said problems in the Michigan Unemployment Insurance Agency (UIA) date back to at least 2012, when an audit found that the agency had failed to hold accountable employers who didn’t pay their unemployment taxes. He said it isn't enough to simply repay wrongly accused workers garnished wages - many of them have also incurred legal costs.
Gideon D’Assandro, a spokesman for the state House Republicans, said "House Republicans have been working to get to the bottom of the issue and find out what went wrong."
The news service MIRS reports that so far, $5.4 million has been returned to wronged UI benefit claimants out of the $169 million Penalty and Interest Fund.
Proposed by state Democrats, the new legislation will go nowhere without Republican support. If adopted, the new rules would:
*Reimburse costs incurred by victims of false fraud allegations, including lost benefits, fees, penalties, legal fees, late fees and other expenses.
*Reduce the worker penalties imposed for Unemployment Insurance Agency overpayments and fraud to no more than 100 percent. Michigan's 400 percent penalties are the highest in the country,
*Improve due process and notice requirements to claimants.
*Require state agencies to help those affected by a separate MiDAS security breach, which exposed the personal information of up to 1.9 million people to unauthorized viewers.
*State Dems also threw in a few bonuses for workers, that are unlikely to see the light of day. They suggest increasing the maximum unemployment insurance benefit to $483 a week, from $362 currently, and add a $120 a week supplement for claimants with dependents. They would also extend the maximum number of benefit weeks to 26 from the current 20 weeks, bringing Michigan in line with other Midwest states. The Snyder Administration signed off on reducing six benefit weeks several years ago.
*Increase oversight of unemployment insurance fraud by employers and increase penalties for delinquent employer unemployment taxes.
*Extend the statute of limitations to cover a period from Jan. 1, 2007, through Dec. 31, 2016. Currently, only a period from Oct. 1, 2013, and Aug. 7, 2015, is covered.
The fraud accusation problems stem from the use of a $47 million computer system, MIDAS - the Michigan Integrated Data Automated System - which the state put online in October 2013. UIA officials used the system to do a six-year look-back in search of fraud. But until August 2015, no human beings were verifying the computer's fraud findings, which was subsequently found to have an error rate of 93 percent.
The Talent Investment Agency, which oversees the Unemployment Insurance Agency, "welcomes the opportunity to work with its partners in the Legislature as it continues to work aggressively to make more effective and address some of the recent challenges," Director Wanda M. Stokes said. Stokes, who dumped the leader of the UIA, said she feels horrible about the situation related to the fraud accusations, and has apologized to the people affected and is focused on improving customer service in the agency.
Stokes said the agency has set changes in place to improve the system, and knows there is more to do. “We want the UIA to be a place people can turn to when they are going through a difficult time, and we are focused on making sure people get the benefits they are entitled to,” she said. “We have worked with state lawmakers to make reforms in the fraud determination system, and set those changes into law.”
Stokes said the agency is committed to reviewing about 50,000 cases determined between October 2013 and August 2015. A computer program was used to auto adjudicate about 22,000 cases, and a review was completed late last year. UIA is reviewing about 28,000 additional cases that were determined with a mix of the computer system and some level of staff involvement, work that is expected to be completed in June.
"We need to do right by every single person who was wrongly accused of fraud, and if that requires going all the way back to 2007 to when these issues started, so be it," said Senate Minority Leader Jim Ananich (D–Flint). “This is outrageous and completely unacceptable. I am seeking a legislative fix to correct this situation and ensure that anyone who had money wrongfully seized by the state government is repaid in full. This was the state’s mistake, and the state must take responsibility.”
State Dems are also flipping the script, and calling for 100 percent penalties for employers who are 30 days late in paying their UI benefits.
"Michigan's Unemployment Insurance Agency is broken, and it's time to fix it," said Michigan AFL-CIO President Ron Bieber. "Gov. Snyder and Lansing Republicans manipulated the state's unemployment laws to favor their corporate campaign donors, and working people have been taking it on the chin ever since. It's time to make this right, and start treating jobless workers with the dignity and respect they deserve."