500 still owed money after Michigan unemployment system fiasco

An unemployment office
Bytemarks via Flickr CC BY-SA 2.0

The state has still not repaid roughly 500 people who were wrongfully flagged as having committed unemployment insurance fraud between 2013 and 2015, Gov. Gretchen Whitmer’s office announced Thursday.

The latest disclosure comes after Michigan refunded $21 million over 48,000 false fraud accusations the Michigan Unemployment Insurance Agency (UIA) made against people who had filed for or were receiving jobless benefits from the state.

Gretchen Whitmer

Michigan pledged to repay money that was wrongfully seized during the fiasco. But about 500 people have still not been refunded, Whitmer’s office announced in a press release.

The department has been unable to track them down despite repeated attempts, according to UIA spokesman Chris De Witt. The agency still owes them a collective $400,000, De Witt said.

In response, the governor and Attorney General Dana Nessel say they’re urging victims of a faulty state computer program that made the false fraud determinations to voluntarily report that to the state in a last-ditch effort.

“We are making sure we explore every avenue to return funds to each person owed monies resulting from unemployment insurance fraud determinations between 2013 and 2015,” Whitmer said in a statement. “And that means reaching out to our fellow Michiganders to help us in this statewide search for those who have not yet claimed their refund.”

During former Gov. Rick Snyder’s tenure, a faulty, automated computer system made many of the phony fraud accusations, spurring the state to scrap the software in favor of actual people reviewing benefit claims to the UIA.

Rick Snyder

In response, the agency reviewed more than 62,000 fraud accusations involving nearly 50,000 people, according to the Department of Talent and Economic Development (TED).

The false fraud accusations often came with large fines and penalties — including wages that were wrongfully seized by the state over fraud that never actually occurred.

After a state review, Michigan reversed 85 percent of more than 40,000 fraud determinations made between 2013 and 2015 by the now-defunct automated system.

In 2016, Snyder appointed a new director to the Talent Investment Agency, which oversaw the program. Wanda Stokes, was at the helm of internal changes made in the wake of political fallout over the wrongful fraud accusations, with Democrats often criticizing Snyder over the issue and his administration’s attempts to resolve it.

Democrats argued the state needed to go further than the $21 million refund to claimants by also reimbursing late payment fees and court costs.

In 2017, they also proposed increasing the duration of unemployment benefits, the weekly benefit amount, reducing penalties for fraud, reimbursing lost benefits and potential expenses such as bankruptcies, and increasing penalties on late employer tax fees related to unemployment insurance.

Michigan Capitol | Susan J. Demas

The Michigan Chamber of Commerce came out in fierce opposition to that proposal. The Legislature instead approved a more modest plan that reduced unemployment fraud penalties, but did not include extra victim compensation.

Whitmer and Nessel did not announce plans to cover further costs. Court costs and late payment fees are still not covered. But the two urged those who still haven’t been repaid for wrongfully seized money to notify the state.

“We want to make certain that any state residents who were entitled to receive reimbursements are able to access those funds,” Nessel said in a statement. “That is why we are coming together to ask the public to assist us in that process.”

Dana Nessel

Unemployment Insurance Agency Senior Deputy Director Michelle Beebe said the state hopes to refund those who are still owed money “as soon as possible.”

Whitmer has not yet appointed a new UIA director. Beebe currently oversees the agency under Stephanie Beckhorn, interim TED director.

Claimants can report outstanding refunds on this website or log into the Michigan Web Account Manager (MiWAM).

Meanwhile, a three-member panel for the Sixth Circuit U.S. Court of Appeals in January allowed a lawsuit to proceed that argues state employees were responsible for “implementing, overseeing and continuing” the faulty computer program, the Detroit News reported.

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