Lawsuit Seeks Millions From State For Illegally Seizing Tax Refunds

ROYAL OAK (WWJ) - A local law firm is suing the state for illegally seizing the tax refunds of hundreds of Michigan workers.

Jennifer Lord is a partner at Pitt McGehee, Palmer & Rivers in Royal Oak and is representing the firm who filed the lawsuit against the state's Unemployment Insurance Agency.

Lord says this is a high-tech nightmare scenario which has already resulted in tens of millions of dollars in tax refunds being improperly seized from thousands of people who've done nothing wrong or illegal.

She says a computer system is to blame: "When this computerized system flags someone as having committed fraud - it goes into overdrive and it doesn't present the worker with an ability to respond."

She says the machines are not good substitutions for people because the computer can't distinguish between a mistake or fraudulent behavior.

"The system, allegedly, is designed to weed out workers who are trying to get unemployment compensation benefits when they are not entitled to them," says Lord, "and I think everyone agrees that that's a laudable and an important goal but the problem becomes they are capturing so many innocent people who have valid claims." [READ COMPLAINT]

The lawsuit says those effected should be paid the total amount they're owed from the state- the lawsuit, if successful, could mean a payout of millions of dollars for the hundreds of workers who have had their federal and state tax refunds illegally seized by the State.