Bills to improve handling of unemployment insurance fraud headed to Gov. Snyder

Dec. 13--LANSING -- Bills are headed to Gov. Rick Snyder to help prevent a recurrence of a recent state government fiasco in which tens of thousands of Michigan residents were falsely accused of unemployment benefits fraud.

The state Senate on Wednesday gave unanimous approval to the eight-bill package, which was earlier passed by the state House and will also help combat cases of unemployment insurance fraud resulting from identify theft.

"This legislation is a great bipartisan effort to help improve the unemployment insurance operations on a number of important issues both for the general public and employers," said Wanda Stokes, director of the Talent Investment Agency, which oversees the Unemployment Insurance Agency.

Business and labor groups are supportive of the bills they say will help prevent another rash of false fraud accusations, while at the same time addressing a growing problem of genuine unemployment insurance fraud resulting from identify theft.

But advocates for claimants say the legislation does little or nothing to help those whose lives were turned upside down when the state's $47-million automated system for fraud detection, the Michigan Integrated Data Automated System (MiDAS), ran amok between 2013 and 2015, when it was used to identify fraud in jobless claims going back as far as 2007.

"These bills are by no means comprehensive, nor are they perfect," said AFL-CIO President Ron Bieber.

"There is still more work that must be done to make things right for people who were falsely accused of unemployment fraud," but "this bipartisan legislation will go a long way towards preventing another disaster like this from happening again."

Senate Bills 5165-5172, would, among other changes:

(ASTERISK) Require the Unemployment Insurance Agency to send notices of suspected fraud by claimants to all known addresses, not just the last address on file with the agency. Because of problems with notice, many of those falsely accused of fraud did not find out until their wages were garnished or their income tax refunds were seized.

(ASTERISK) Allow alleged fraud cases to be reopened, after the appeal period has expired, if claimants can show the notice was sent to an incorrect address.

(ASTERISK) Reduce Michigan's highest-in-the-nation 400% fraud penalties to 100% for a first offense and 150% for subsequent offenses. The 400% penalty would be maintained for impostors who fraudulently obtain benefits through identify theft.

(ASTERISK) Create an advocacy program to help claimants navigate administrative hearings. Claimants accused of fraud would only have to pay the costs of the advocacy if the fraud finding was upheld.

(ASTERISK) Remove the 1% monthly interest charge on overpayment of unemployment benefits in cases where the overpayment was because of an error by the agency, not the claimant.

Another key remedy -- prohibiting MiDAS from making a fraud determination without review by a human being -- was implemented in 2015.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com. Follow him on Twitter @paulegan4.

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