After some falsely accused, state reviews unemployment fraud cases

May 6, 2016 Issues: Economy
U.S. Rep. Sander Levin, D-Royal Oak, stands with Blanche Jackson and Vincent Charlton, who claim they've been falsely accused by an automated system of unemployment fraud, during a press conference outside state offices at Cadillac Place in Detroit on May
After some falsely accused, state reviews unemployment fraud cases

DETROIT -- A group of people who have had tax refunds and unemployment benefits garnished after being falsely accused of fraud spoke out Friday against what U.S. Rep. Sander Levin called a "lawless, reckless, impersonal" system.

A state official in response said changes have been made and cases are being reviewed.

Vincent Charlton of Detroit received a letter in 2015 telling him he received $5,000 more than he should have in unemployment benefits during a period in 2012, when he was laid-off from a job at Tom's Oyster Bar.

With penalties, the state wanted $29,000 from him.

"It was devastating because I knew there was no way I could pay that kind of money, and I knew I wasn't in the wrong," Charlton said after a press conference Friday outside state offices at Cadillac Place.

After a series of unreturned phone calls and letters, Charlton, with the help of a lawyer, finally got a hearing last month in which he presented a W-2 that proved he did not lie about his wages back in 2012, and the fraud charges against him were dropped.

Levin, D-Royal Oak, and a group of lawyers said Friday that the state's automated unemployment fraud detection system had been flagging any discrepancy between documents filed by applicants and their former employers, issuing charges and persistently pursuing restitution under the assumption that the employers' figures are correct.

The state says it stopped using an automated system to issue fraud determinations in August 2015, but a lawyer representing people fighting those determinations and a former director of Michigan's Unemployment Insurance Agency claim the automatic system is still running.

"They continue to auto-adjudicate fraud cases. Even though they say they're not. They are continuing to auto-adjudicate, which means additional people are being put through this Hell," said," said Liza Estlund Olson, a union representative for state employees and a former director of the Unemployment Insurance Agency.

"... The agency should be stepping forward and reviewing those cases and giving that money back now. They should not be making these citizens go through all of these hoops."

Ken Silfven, spokesman for the Michigan Talent Investment Agency, which oversees the Unemployment Insurance Agency, said Friday afternoon that an automated system still flags discrepancies, but that those cases are reviewed before fraud determinations are issued.

"Before we stopped using that feature last summer, the system – if it flagged a claim for possibly involving fraud – would make the determination and send it to the claimant," Silfven said. "Now, since we turned that feature off in August 2015, the system may still flag a claim for possible fraud, but if it does, our staff steps in and reviews it and conducts the outreach to get more information."

An audit released in April found that Michigan's Unemployment Insurance Agency failed to answer 89 percent of calls from people seeking assistance during a one month monitoring period in 2014.

The audit also determined that the agency could improve how it handled cases in which claimants were accused of intentionally misrepresented facts.

From Oct. 1, 2013 to March 31, 2015 the UIA issued 60,234 re-determinations and found intentional misrepresentation on 78% of those claims.

But when the Office of the Auditor General sampled 60 of those re-determinations, it found the UIA did not make every effort to contact claimants or communicate the consequence of not responding, nor did it provide reasoning or facts behind those determinations.

Levin wrote a letter to the state calling for a review of all such cases and the issuance of refunds to all who have been forced to make restitution payments after being falsely accused of fraud.

A letter from the state Talent and Economic Development Department sent to Levin's office Friday indicated that reviews are already underway.

"UIA has been in communication with USDOL (U.S. Department of Labor) regarding a review of the auto-adjudicated cases referenced in your letter and is finalizing the details of the plan with USDOL," the letter read. "The Agency has already initiated the review. Where it is determined that an individual does not owe restitution, refunds will be issued. We always want to make sure people are treated fairly."

The full response is available here.

Silfven elaborated on the reviews, and said the effort is being expanded after getting an OK from the federal government to proceed with reviewing cases going back more than a year.

"We've actually been reviewing cases since last year, so we're on top of it," he said.

"... Michigan law prohibits the agency from reopening fraud cases that are older than one year, if the agency issued a determination and it was not appealed by the parties. So we made that clear to the U.S. Department of Labor... We've been told to proceed anyway, and so we're working with the federal government on a plan to get this done... We've been reviewing cases and if it's determined that a person does not owe restitution, we're issuing refunds because we always want people treated fairly."

View the origional story here.