The Building Tradesman Newspaper

Friday, February 21, 2020

False unemployment fraud resolution delayed, again

By Jillian Otten

LANSING - For wrongly accused victims of state Unemployment Insurance fraud, what the Michigan Court of Appeals giveth, the state attorney general's office is seeking to taketh away. 

Or at least, get a ruling on the matter from a higher source.

In December, the state Court of Appeals panel ruled that thousands of Michigan's jobless workers who were falsely accused of fraud by an out-of-control computer system - many of whom lost their home or went into bankruptcy as a result - could seek damages from the state. 

Last month, state Attorney General Dana Nessel's office opted to appeal the Bauserman v. Unemployment Insurance Agency ruling to the Michigan Supreme Court, asking the High Court to reject those claimants' right to seek damages.

Nessel's office argued that when there is monetary relief sought in such lawsuits against state government, federal case law has indicated that the remedy should be left to state legislative bodies.

"If left to stand," the appeal said, "the Court of Appeals' decision would allow for the violation of the separation-of-powers doctrine by permitting courts to authorize sizeable awards of money damages without legislative authorization."

Jennifer Lord, the Royal Oak attorney representing the plaintiffs, called the state appeal “disappointing," but said it has been part of the state's strategy for years.

“This has been their tactic all along, to delay and delay and delay," she told Bridge Magazine. "It is just really disappointing, because in most cases when a party appeals, they have a good-faith argument they didn’t do anything wrong. The state has admitted it was wrong – they took money that wasn’t theirs to take. To keep defending this is pretty shocking.”

An internal review by the state Unemployment Agency found that more than 20,000 Michigan workers who had received jobless benefits in a 22-month period prior to August 2015 were falsely flagged for fraudulent activity by a state computer system. The computer system, named MIDAS, used algorithms to detect "fraud," as a cost-saving replacement for a laid-off workforce in the UIA who had formerly done the work.

There are estimates that up to 40,000 jobless workers were wrongly accused, many of whom had their wages garnished or tax returns seized. The state has refunded more than $20 million to many of the fraud victims, but there are many more whose cases are outstanding. 

When she was campaigning for office in 2018, Nessel said in a Michigan Radio interview that "clearly the Unemployment Insurance Agency committed an egregious act" against the UIA claimants and is responsible  "improperly taking their money."

Upon further review, Nessel's office issued this statement in conjunction with their decision to appeal the case to the Michigan Supreme Court:

“This appeal was necessary because Michigan has no case law on how or when a court can award money damages in a case where the plaintiffs allege a violation of their due process rights.  We certainly want to get this right. That is, we want  to pay an appropriate amount to those individuals who have truly been harmed because of the failure to receive notice and an opportunity to be heard before the Agency issued its fraud adjudication. To do so, we seek guidance from the Supreme Court of this state.”