The Building Tradesman Newspaper

Friday, January 12, 2018

State lawmakers seem ready to OK reparations for unemployment 'fraud'

By Marty Mulcahy, Editor

LANSING - With more than 48,000 workers in Michigan falsely accused of unemployment insurance fraud - people who had to pay millions of dollars out of pocket to fight the charges or make up for the losses and fines - state House Democrats unsuccessfully called for the establishment of a $50 million fund in an effort to make them whole.

Late last year Gov. Rick Snyder signed a bipartisan set of bills that will institute much-needed reforms at the Michigan Unemployment Insurance Agency. In 2013, the UIA launched a computer system that automatically flagged unemployment claims for fraud in what a subsequent review found was wrong in 93 percent of cases. The system automatically garnished wages and tax returns if claimants didn't respond promptly to the false accusations, and many accused claimants never received any notice of fraud from the state.

"You should never be penalized for a mistake someone else made. I am glad that Gov. Snyder is finally taking responsibility for the mismanagement of the UIA system and has committed to taking action to help falsely accused Michiganders rebuild their lives,” said state Rep. Kevin Hertel (D-St. Clair Shores), a member of a bipartisan UIA workgroup that wrote the UIA reform bills. “I was pleased we were able to come to a consensus on how to fix our UIA system so that no one will be in this situation ever again, but until we create a fund and dedicate resources to helping UIA victims get their lives back, we haven't done our job. I look forward to working with the governor to ensure that families are made whole when we get back to Lansing in January.” 

The bills fixing the UIA that were adopted in December, according to the news service MIRS, create a new identity theft verification structure within the UIA that has new checks to verify that those who are applying for unemployment benefits are legit. They create an advocacy program for the accused, stop the UIA from being able to charge interest when the state overpays someone, cuts down on the penalties from 400 percent (easily the highest penalty in the nation) to 100 percent and creates some waivers for economic hardships. 

The computer system was finally abandoned in 2015. In August, the Unemployment Agency announced it would refund any money that was falsely collected from claimants, an amount estimated at $20.8 million to be disbursed to about 20,000 people. However, few people in state government think that that fix was adequate: after all, the false accusations forced many people to give up homes or go into bankruptcy.

On Dec. 13 State Rep. Darrin Camilleri (D-Brownstown Twp.) introduced legislation for a supplemental appropriations bill that would take $50 million from the Unemployment Insurance Agency’s existing Penalties and Interest fund to pay damages to claimants. Ruling House Republicans declined to adopt the measure on a voice vote, but said the issue would be revisited in the New Year.

State Rep. Peter Graves (R-Argentine Twp.) told MIRS he was "irritated" that Camilleri inserted the compensation legislation while the issue has been an ongoing subject of negotiations in committee. "I think it's reasonable to have the conversation to see if there is something we can set up structurally in policy and use the Penalty and Interest Fund," Graves said. "So we have been talking about that."