Feds say Michigan Must Reopen Unemployment Fraud Cases

May 6, 2016 Issues: Economy

A Michigan Congressman says the state’s government is wrongly penalizing tens of thousands of people on unemployment for fraud they never committed.

The federal government could withhold $100 million in funding from Michigan…if the fraud cases are not re-examined.

Between 2014 and 2015 an automated system flagged about 30,000 people in Michigan for submitting fraudulent unemployment claims and penalized them a total of roughly $60 million.

But this year the state’s Auditor General found almost all of those people were innocent.

Michigan Congressman Sander Levin says many of the claimants were not notified of fraud allegations until after they’d already been penalized.

“And so thousands upon thousands of people, from what we know, were hurt. And the state government was invisible,” Levin said.

Even when claimants were able to appeal, Ypsilanti resident Carolyn Hayes says state officials were not especially helpful.

“They didn’t do anything,” Hayes said. “As a matter of fact they didn’t even show up for my hearing. They never called. Nobody ever showed up. Nobody ever said to adjourn it, stay or anything. They just left me out paying it.”

Hayes says a judge ruled she had not committed fraud.

Congressman Levin says the state must re-open other cases that were not appealed and reimburse anyone unfairly penalized or Michigan will remain out of compliance with federal requirements. That means the state risks losing $100 million dollars in federal funding.

But a spokesperson for the unemployment system, Ken Silfven, says state law forbids them from re-examining cases once they are more than a year old.

Silfven says a computer no longer judges whether unemployment fraud occurred.

But he says the problem stems from employers, not the computer, providing inaccurate information.

“You know a lot of people try to make the automated system out to be this kind of villain or some kind of system that’s run amok. Please understand there’s nothing wrong with the system,” Silfven said. “We can only have a determination on what information is provided. There are federal requirements that we’re held to regarding response timeliness. So we can’t wait forever to make a determination on a case. We eventually have to make a decision.”

Silfven says the state is now working with the U.S. Labor Department to address the situation.

Labor officials say the state statute prohibiting a re-examination of unemployment fraud cases does not apply in this instance because Michigan was out of compliance with federal law at the time officials accused the recipients of wrongdoing.

View the origional story here.