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.
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.”
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.