Michigan House OKs Unemployment Changes After Fraud Scandal

LANSING, Mich. (WWJ/AP) – Michigan would cut its penalties for defrauding the unemployment benefits system under legislation approved by the state House.

The measure is included in an eight-bill package sent to the Senate Wednesday. It was proposed in the wake of a scandal at the state Unemployment Insurance Agency, which has reversed at least 44,000 fraud cases covering a two-year period after a computer system wrongly accused people of collecting excessive benefits.

The bills would require more ID from claimants applying for benefits and create a mechanism so employers and claimants could address claims filed by impostors.

The agency also would have to reconsider prior determinations of fraud if there is evidence that information was not sent to a beneficiary’s address.

Michigan’s Unemployment Insurance Agency in February settled a lawsuit filed after at least 20,000 people receiving benefits were wrongly flagged for fraud by an automated computer system and assessed high financial penalties.

State officials said that deal codified changes the agency made after ceasing “robo-” or “auto-adjudicated” cases in 2015, about four months after the federal suit was brought. The state had recently agreed to halt all collection activities against people who were subject to fraud determinations between October 2013 and August 2015.

A lawyer for the plaintiffs, David Blanchard in Ann Arbor, said at the time, the state and its attorneys for too long “denied the problem and fought for a status quo that robbed unemployment beneficiaries of tax returns and income without due process. My clients and I are heartened by new leadership who finally acknowledge the problem and recognize that this settlement is this first step, but not the last step, of essential reform to the UIA.”


(© Copyright 2017 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.)

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