Michigan unemployment system victims to get their day in court

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Thousands of people were falsely accused of unemployment insurance fraud in Michigan, thanks to an automated computer system. Now a Court of Appeals panel has ruled their class-action lawsuit against the state of Michigan will be heard.

In a published opinion issued Thursday in Bauserman v. Unemployment Insurance Agency, judges ruled against the state, allowing victims to seek damages. The Michigan Supreme Court in April allowed the suit to proceed after a previous COA panel had booted the case, saying plaintiffs filed too late.

During the Gov. Rick Snyder administration, the Unemployment Insurance Agency’s (UIA) MiDAS computer system generated thousands of false fraud claims, with more than 40,000 made between 2013 and 2015 ultimately being reversed. Michigan has refunded about $21 million in penalties for false fraud accusations the UIA made against people who filed for or were receiving jobless benefits.

Michigan Supreme Court allows unemployment fraud suit to proceed

However, victims are suing for damages for the economic and emotional cost of the faulty fraud claims. Many had wages garnished, hefty lawyer bills, bankruptcies and foreclosures.

The judges wrote in their opinion that “we afford ‘significant weight’ to the ‘outrageousness’ of the misconduct by the Agency that plaintiffs allege in this case, and we conclude that it weighs in favor of a judicially inferred damage remedy.”

They continued that the UIA’s actions “may have led to the undermining of the due process rights of thousands of innocent citizens across this state at a particularly vulnerable time in their lives, having lost their gainful employment for one reason or another.”

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State Senate Minority Leader Jim Ananich (D-Flint) praised the ruling and slammed the UIA under Snyder.

“These wrongful accusations of fraud have ruined people’s lives. Since 2013, countless victims have reached out to my office with stories of going into debt, having to declare bankruptcy, and losing their homes. We have been working for years to address the fallout of this mismanaged and disastrous program of the previous administration,” he said. “What Gov. Snyder’s agency did to these families is downright criminal, and the plaintiffs deserve their day in court.”

In September, Michigan House Democrats introduced a 10-bill package that would increase unemployment benefits and add more worker protections.

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Susan J. Demas is a 19-year journalism veteran and one of the state’s foremost experts on Michigan politics, appearing on MSNBC, CNN, NPR and WKAR-TV’s “Off the Record.” In addition to serving as Editor-in-Chief, she is the Advance’s chief columnist, writing on women, LGBTQs, the state budget, the economy and more. Most recently, she served as Vice President of Farough & Associates, Michigan’s premier political communications firm. For almost five years, Susan was the Editor and Publisher of Inside Michigan Politics, the most-cited political newsletter in the state. Susan’s award-winning political analysis has run in more than 80 national, international and regional media outlets, including the Guardian U.K., NBC News, the New York Times, the Detroit News and MLive. She is the only Michigan journalist to be named to the Washington Post’s list of “Best Political Reporters,” the Huffington Post’s list of “Best Political Tweeters” and the Washington Post’s list of “Best Political Bloggers.” Susan was the recipient of a prestigious Knight Foundation fellowship in nonprofits and politics. She served as Deputy Editor for MIRS News and helped launch the Michigan Truth Squad, the Center for Michigan’s fact-checking project. She started her journalism career reporting on the Iowa caucuses for The (Cedar Rapids) Gazette. Susan has hiked over 3,000 solo miles across four continents and climbed more than 60 mountains. She also enjoys dragging her husband and two teenagers along, even if no one else wants to sleep in a tent anymore.