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State refund for unemployment insurance debacle “a drop in the bucket,” says attorney

Aug 15, 2017

The state has admitted it made a whopping mistake when it accused tens of thousands of Michiganders of cheating on their unemployment benefits.

The Unemployment Insurance Agency reviewed 62,784 cases where people were accused of fraud and hit with penalties.

In some 44,000 of those cases, that accusation was completely false – no fraud took place.

Now the state's in the process of refunding close to $21 million to those people. Talent and Investment Agency Director Wanda Stokes is promising they’ll do better.

“We want to improve a number of our processes. We want to improve our communications, and not only on the computer, by phone, and how we communicate, you know, in terms of getting these payments done accurately and fairly for our citizens," she said.

Attorney Jennifer Lord joined Stateside today. She has filed a class-action suit on behalf of people who were falsely accused of unemployment fraud.

She said the refunds the state is issuing now “doesn’t come anywhere near close to compensating people.”

“It’s important to know that while this might be a small step forward, what the agency is doing, that $21 million is a drop in the bucket,” she said, “and that can be demonstrated by the state’s own audited financial statements.”

Listen above to hear Lord explain exactly what caused this mistake, how she knows these refunds are not enough, and where her class-action suit stands now.

Stateside reached out to Dave Murray, spokesperson for the governor and communications director at the Michigan Department of Talent and Economic Development.

Murray responded via email with this statement:

Following the naming of a new leadership team by Gov. Rick Snyder, the Talent Investment Agency – Unemployment Insurance has completed a top-to-bottom review of operations, customer service standards and fraud determination cases.

The agency has made comprehensive changes to Unemployment Insurance to correct the problems and ensure residents get benefits quickly and accurately. In addition, the agency is in the process of refunding more than $20.8 million to residents who had fraud determinations reversed because of the reviews.

“We took action after a hard look at every aspect of Unemployment Insurance, fixing the problems with guidance from national experts, people who use our system and our own staff who work with our residents each day,” said TIA Director Wanda M. Stokes. “Our top priority is helping our state residents, making sure they are treated fairly and get the benefits they need during a stressful time. Our initial focus was on a painstaking review of all the cases in question so we have the clearest picture of what we have to do to make things right and restore public trust in the system.”

Stokes said many people are helping the agency, and she appreciates the efforts of U.S. Rep. Sander Levin, the state Legislature and others who called attention to problems the system has encountered.

Gov. Snyder appointed Stokes in 2016 to direct TIA and address the agency’s challenges. Stokes quickly started to implement changes, including bringing on Michelle Beebe, the former director of Utah’s top-performing unemployment insurance program, to lead TIA-UI.

“My approach moving forward is to focus on the problems and fix them, not to place blame or take credit,” Beebe said. “We are improving communication, enhancing program integrity, strengthening service delivery, and making for a quicker return to employment for people who have lost their jobs.”

Efforts include:

Better serving state residents by working closely with claimant advocacy groups, lawmakers, employers, and community partners for feedback.  These efforts include a legislative workgroup led by state Rep. Joe Graves to address laws concerning identity theft and fraud penalties. TIA-UI is committed to listening and improving, and these conversations will continue.

Improved methods for residents using the agency’s computer system to quickly get benefits. Working with a consultant with expertise in improving operations, TIA-UI staff submitted a significant number of suggestions for system improvements, resulting in enhanced training, policy clarifications, and computer system changes.

Improved staff interaction with residents over the phone and online to better serve customers. This summer, TIA-UI contracted with a process-reengineering expert to identify best practices used in other government and private organizations. Development of a new system, including consolidating agency phone numbers to make it easier for customers to navigate, is ongoing.

Improved communication with customers. TIA-UI is reviewing all letters sent to residents and employers as part of the claims filing process. The review will be completed in the fall, and all letters updated in the months ahead. This includes simplifying instructions on registering for work and strengthening the connection with local Michigan Works! offices. Staff also is reviewing and updating electronic communications.

Outside help from national experts to review and improve all aspects of the agency’s work and processes. The Unemployment Insurance Integrity Center, a joint venture between the National Association of State Workforce Agencies and the U.S. Department of Labor, is reviewing TIA-UI’s processes around identity verification and collections. This group, which includes the subject matter experts, will recommend best practices in providing customer service while protecting the integrity of the program. An IT expert consultant is finalizing the review of the MiDAS system.

TIA-UI continuing to make changes to operate more effectively, making it easier for people to get benefits while protecting against identity theft and fraud. TIA-UI last month began the second phase of organizational changes. An Investigations Division was created to work closely with the Tax and Benefit divisions. These divisions will receive support to improve policies, monitor performance trends, and enhance technological support from the internal controls and agency services divisions.

TIA-UI also has completed a review of all cases between October 2013 and August 2015 where fraud was alleged, focusing on whether a claimant was overpaid benefits, and, if so, determining whether there was an attempt to commit fraud. These cases represent 49,910 people. Individuals may have more than one case.

A portion of these cases were previously questioned and resolved through the appeals process. A total of 4,955 cases for which fraud was assessed during this time period were resolved through appeals.

TIA-UI has reviewed 62,784 cases for which people were assessed a fraud penalty and did not seek an appeal. Of those cases, 40,195 were originally resolved by way of computer program based on available information. As part of the review, 85 percent of these original fraud findings were reversed. The other 22,589 cases of the original 62,784 were initiated by computer program and then referred to an investigator for further review or action. As part of the latest review, 44 percent of these fraud findings were reversed.

Cases that go through the appeals process often have additional facts presented in a hearing that were previously not provided to the agency. Outside of this review project, for the 12-month period ending September 2016, administrative law judges either reversed or modified the agency’s decision on 41 percent of all cases.

For most of the reversals during this latest review, residents received benefits to which they were not entitled, but did not intend to commit fraud. In other cases, the employer reported quarterly wages to the agency, with the agency later discovering that those wages were not actually earned during the weeks the person filed for unemployment benefits.

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