LANSING (AP) – The state auditor again found fault with Michigan’s Unemployment Insurance Agency, saying Wednesday that the department has only partially complied with a 5-year-old audit that criticized failures to collect delinquent taxes employers are supposed to pay into the system.
The audit came days after Gov. Rick Snyder’s administration reassigned the agency director after thousands of people without jobs were wrongfully accused of fraud by an automated computer system. It was at least the fifth time since 2011 that the state has released an audit critical of the agency.
While citing improvements, the audit said the agency had not fully complied with calls to more aggressively target delinquent employers by going to court and pursuing other actions. Auditor General Doug Ringler also found other issues, such as the agency filing liens against employers in counties where they did not own property.
State spokesman Dave Murray said the agency “has taken significant steps to reform processes and policies to address findings, and will continue to build on this work moving forward. The auditor’s report notes these improvements, and we know there is more to do.”
A review of unemployment fraud cases made public in December found an error rate of 93 percent in cases in which determinations were made by the computer system between October 2013 and early August 2015. A class-action lawsuit filed in state court in 2015 alleges that state software made determinations of improper payments after sending questions to the online accounts of beneficiaries who never saw the notices and therefore could not respond.
People have also sued in federal court, where Judge Robert Cleland on Wednesday ordered the state to halt all collection activities against claimants who were subject to fraud determinations in the nearly two-year period in question, “unless and until individually reviewed by agency staff and affirmed with new notice to claimant.” The plaintiffs and state attorneys had stipulated to the proposed preliminary injunction last week.
Since early August 2015, the state no longer uses the automated system to issue fraud findings and instead has staff investigate, review and make such determinations.
Snyder this week signed legislation to codify the ban against determining unemployment fraud without human verification, but Democrats have accused the Republican of taking too long to resolve problems.
House Minority Leader Sam Singh of East Lansing said Wednesday the situation is a “complete mess.” And Senate Minority Leader Jim Ananich of Flint said he will introduce legislation to create a compensation fund to make sure laid-off people are repaid what they are owed, a figure he said could total roughly $50 million.
Fraud determinations can result in penalties of up to four times the overpayment.
“That’s just unconscionable the government would do that and it would take this long to realize this problem happened and still sort of fight the process of rectifying the problem,” Ananich said.
The GOP-led House held hearings last year. Ananich said the Republican-controlled Senate should investigate, too.
“I think it’s important for the Legislature to say, ‘When you defraud our citizens, we’re going to stand up for them,'” he said.
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