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Rep. Levin: State must fix "lawless" unemployment system

May 6, 2016

Michigan U.S. Rep. Sander Levin, D-Royal Oak, says the state needs to fix its “lawless” unemployment claims system, or risk losing federal money to administer the program.

The state switched to an automated claims processing system, the Michigan Integrated Data Automated System (MiDAS), in 2013.

Since then, fraud claims have spiked. But many people say they’ve been falsely accused, and that the system for appealing is a nightmare.

In reports released this year, Michigan’s Auditor General has found that only 8% of those fraud findings were upheld on appeal, and that many people were never notified in the first place.

Under Michigan law, those accused of unemployment fraud have only 30 days to contest the finding. If they don’t, they could have their wages or tax returns garnished for up to four times the amount of the alleged fraud.

Now Levin is calling for the state to review all fraud findings since the system went automated, and reimburse those who wrongly lost money.

“The state needs to seize the initiative, and contact every single person who was subject to a lawless, reckless, impersonal system,” Levin said.

“If they do not … they can count of members of Congress holding their feet to the fire. But also, they are not going to be able to access the administrative money that they need. This is a federal program, and this state has to follow the federal obligations and rules.”

The state did respond to Levin’s request Friday, more than a week after Levin originally made his request in a letter to Gov. Snyder.

Levin said he was “glad” to get a response from the Michigan Department of Talent and Economic Development, which indicated a willingness to review some cases — but said it contained a “number of inaccuracies.”

For example, the governor’s office has said that under state law, it can’t review cases that are more than a year old. But Levin says the U.S. Department of Labor informed them that’s not true in cases that were not handled according to federal rules in the first place.

Also, the Unemployment Insurance Agency “is still not in compliance with federal law with regards to issues of due process and notifications.” And while the state claims that a human being is reviewing all automatic fraud flags since August 2015, many involved in the process question whether that’s true.

The state “continues to auto-adjudicate fraud cases,” says John Philo of the Sugar Law Center, which has represented a number of people accused of unemployment fraud. “We have seen dozens of cases where we go to the hearings where the person signing off sits there before the court and says ‘I can’t find a basis for fraud. We dismiss this.’”

Blanche Jackson of Detroit was accused of fraud just this year. She appealed and won her case.

But, “I still received a bill this week saying I owed $4000, after I won my case,” Jackson said.

“I’m not working, I can’t file unemployment, I still have bills … so I mean, what do I do? You want me to pay you, but I don’t have money. And the penalties are just going to add up and add up until they get this together. They just need a better system.”