State Officials say most of the people accused of fraudulently filing unemployment claims due to a computer snafu, have been paid back and their cases reversed. Some 50-thousand residents had been accused of unlawfully filing for unemployment between October of 2013 and August of 2015. Officials say a computer program and lack of human oversight caused the problems.
Director of the Unemployment Insurance Clinic at the University of Michigan, Steve Gray, represented a number of people who have been accused of fraud. He says Michigan’s has a 400% monetary penalty for fraud. He says some of those accused had wages garnished and tax returns withheld.
“If you were overpaid 100 dollars, you not only had to pay back the 100 dollars that you were overpaid, you had to also pay, in addition to that, a four hundred dollar penalty”
Gray says there are still hundreds of cases that have not been resolved because of extenuating circumstances. He says in some cases employers filed claims for people who had been laid-off without the individual having any knowledge it.
“There’s kind of this little subset of people that the agency hasn’t been quite as generous with. And that’s the group of people that actually didn’t get the notice and then it took them over a year to find out what was going on and then they would request that their case be reopened and the agency has still been contesting all of those cases”
State officials say 85-percent of the original fraud filings have been reversed and 21 million dollars has been returned to claimants. Additionally, officials say, new protocols for identifying potential fraud are in place and human oversight is required before charging anyone with fraud.
Below is a copy of the press release from the State of Michigan regarding changes to the system:
LANSING, Mich. – 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.”
n 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.
n 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.
n 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.
n 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.
n 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.