Levin wants overhaul of system that investigates fraud

May 6, 2016 Issues: Economy
U.S. Rep. Sandy Levin, D-Royal Oak, and about a dozen Michigan residents accused of fraud by the Michigan Integrated Data Automated System speak out against the system on Friday.
Levin wants overhaul of system that investigates fraud

Detroit — Carolyn Hayes was accused this year by a state automated system of collecting $17 extra in unemployment insurance. She received a $4,000 fine.

“It was devastating,” said Hayes, 48, of Ypsilanti, on Friday at a press conference alongside U.S. Rep. Sandy Levin, D-Royal Oak, and about a dozen Michigan residents accused of fraud by the Michigan Integrated Data Automated System (MiDAS).

The system has been in use since October 2013 by the Unemployment Insurance Agency to flag fraudulent applications. The system routinely levies faulty accusations that later are thrown out in court, according to Levin, who last week wrote to Gov. Rick Snyder urging the state to address the issue.

“This is a serious injustice done to thousands of people,” Levin said Friday at the press conference outside Snyder’s Detroit office at Cadillac Place on West Grand Boulevard. “This is what happens when the government lets machines take over.”

Levin in his letter told Snyder that the MiDAS system between March 2014 and March 2015 flagged nearly 27,000 cases of fraud, costing claimants around $57 million in fines.

“In contrast, in 2012, the year before MiDAS was implemented, the account that holds funds collected from fraud allegations contained only $3 million,” Levin said.

Levin said the sharp uptick was because the system alleges fraud over minor discrepancies that could be caught and corrected by a human reviewer.

“And, in February 2016, the Michigan Auditor General found that computer-determined fraud was affirmed in only 8 percent of appeals, with a full 64 percent reversed or dismissed, and 22 percent where the UIA was asked to review them again.”

Levin said he has not yet heard directly from Snyder in response to his letter. But he did receive a reply Friday morning from Michigan Talent Investment Agency director Stephanie Comai, who said the UIA has partnered with the U.S. Department of Labor to review auto-adjudicated cases.

Comai's letter, written in response to Levin's letter to Snyder, was distributed to media gathered at the press conference.

“The agency has already initiated the review,” Comai said in her letter. “Where it is determined that an individual does not owe restitution, refunds will be issued.”

But Levin said the plan does not go far enough to rectify the damage, and raised concerns the state has claimed it can only review cases less than one year old.

“At this point, there is no systematic plan by the state to review all the claims,” he said. “(The state) needs to look at every single case (evaluated by the MiDAS) and to rectify it by reimbursing people. Every singe case.”

It’s against state law to reopen fraud cases older than one year, according to Ken Silfven, communications director with the Michigan Talent Investment Agency. Silfven spoke to The Detroit News after a request for comment from Snyder was forwarded to his office.

“We don’t just go around breaking state law, so we wanted to make sure (U.S. Department of Labor) understood that their instruction to us was in violation of Michigan law,” Silfven said. “We’ve been told to proceed anyway, and so we’re working with the federal government on a plan to get this done.”

Silfven also defended the automated system.

“It’s actually a federally funded system that was programmed with the same criteria that is followed by our staff,” he said. “I think the issue is two-fold: First, when claimants don’t respond to our request for additional information, we can only base a determination on what information is provided. The other point is that there are federal requirements for response timeliness, so we can’t wait forever to issue a determination on a case. We do need to make a decision.”

UIA workers raised red flags about the system from the beginning, said Liza Estlund Olson, executive director of the employee union.

“They told management there was a problem with the system,” she said. “The governor’s office knew about this for two years and, not unlike with Flint, they did nothing. It’s been a revenue stream.”

Levin’s action isn’t the first time the automated system has faced criticism. A federal class-action lawsuit was filed in April 2015, according to his office. Months later, a state class-action lawsuit was filed in September.

Several affected Michiganians spoke Friday, detailing their battles to reverse fraud allegations levied against them by the automated system.

“I’ve been accused of intentionally misrepresenting and also fraud,” Vincent Charlton said.

The 41-year-old Detroiter said he was flagged for allegedly collecting $5,000 extra and was told he owed a total of $29,000 with fines.

“I was devastated because I knew there was no way possible that I misrepresented,” Charlton said. “I knew there was no way I could pay that kind of money and I knew I wasn’t in the wrong.”

He tried calling the UIA several times and finally “went to pen and paper” with a letter, which led to a court hearing in April. All charges were dropped.

Port Huron resident Adam Artman told a similar story. He also was accused of fraud, and was told he owed $24,000 in reimbursements and fines.

“They said I didn’t turn in some forms,” said Artman, 35. “I tried calling for a week straight, and I would be on hold so long my phone died. It’s hard to get a hold of these people.”

Artman eventually got his day in court where charges were dropped, he said.

“These stories have been multiplied many, many times,” Levin said after several others spoke of their experiences.

But Comai in her letter defended the UIA’s continued use of the automated system.

“It is correct that the UIA discovered more potential fraud than it had previously, but it is important to note that the new automated system gave the UIA the capacity to clear up a significant backlog in a relatively short time frame,” she said.

Fraud is alleged only after “staff investigates, reviews, and makes the determination” on each case, Comai said.

One lawyer at Levin’s press conference Friday disputed that claim, calling it “semantics.”

The MiDAS automated system flags all fraud cases, according to attorney John Philo, with Sugar Law Center, which represents several people accused of fraud. Once the fraud is flagged, an employee rubber stamps the accusation, often without closely reviewing it, he said.

If the case makes it the court, that individual reviews the paperwork and often acknowledges there is no basis for a charge.

Levin repeatedly called on the state to fully overhaul the “lawless program” and to investigate all fraud claims filed since MiDAS was put into use.

“No more excuses,” he said. “No more delays.”

HFournier@detroitnews.com

(313) 223-4616

@HollyPFournier

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