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Critics: State unemployment fixes don't do nearly enough to repair damage

Dec 26, 2017

Gov. Snyder signed end-of-year bills to “modernize” the state’s unemployment system, but some say they don’t do enough to repair the damage caused when the state switched to an automated claims processing system.

Between 2013 and 2015, the Michigan Integrated Data Automated System (MiDAS) wrongly accused more than 40,000 people of fraud, sometimes going back as far as six years, and collected over $46 million in penalties. State assessments of the program during that time found false fraud error rates of at least 70%.

The Michigan Unemployment Insurance Agency says a human reviewer now looks at all computer-flagged fraud findings. The state refunded about $21 million to about 20,000 people this summer, and says it has no plans to refund more.

But several lawsuits are still ongoing. Tony Paris, an attorney with Detroit’s Sugar Law Center, represents some of the people still suing over the debacle. Paris says Michigan’s highest-in-the-nation unemployment fraud penalties — which charged some claimants four times what they received or would have received in unemployment benefits — wreaked havoc on people’s lives.

“That four times penalty forced folks into bankruptcy,” Paris said. “We have, I think, two suicides. We have numerous folks who have seen over $100,000 worth of debt.

“They did this horrible thing where they broke government, and then they blamed government. There was no recourse for these folks.”

One of the new laws Snyder signed lowers the penalty to 100% for a first offense, and 150% for subsequent offenses. Another one allows claimants to apply for a waiver of repayment of benefits if their income is below 150% of the poverty line.

There are also new measures to address proper notification of benefits decisions, to allow representation for people accused of fraud, and provide better identify theft protection.

Gov. Snyder noted they emerged from the recommendations of a stakeholder workgroup and passed with widespread, bipartisan support.

“Everyone worked diligently together to solve these problems, rather than just criticize the agency, and that’s the approach we will continue in 2018 as we further address any problems created by the automated fraud system,” Snyder said in a statement.

But Paris and others representing people wronged by the system say these fixes don’t go nearly far enough.

“The state still brings in a pretty penny due to this broken system, and it still deters people from filing unemployment,” Paris said. “It’s given them a lot of what they’ve wanted, and that’s why a good part of it is still in play.”