State review: 93% of state unemployment fraud findings were wrong

Dec 19, 2016

Between late 2013 and mid-2015, Michigan’s automated system for processing unemployment insurance claims flagged 53,633 cases of fraud.

But a new state review of some of those cases found that the system was wrong — 93% of the time.

That’s prompted U.S. Sander Levin, D-Royal Oak, to call for a full review of all the fraud cases auto-adjudicated during that period.

“This high level of error rate in accusations of fraud is outrageous for any government program, especially one for unemployed workers trying to stay afloat while they find another job. Running a fully automated system that spit out fraud determinations for such a long period of time was in violation of federal law and completely reckless,” Levin said.

Now, “the state simply has to now take the initiative,” and take a second look at all the fraud determinations, Levin said. “We shouldn’t have to push it for there to be due process for our citizens.

“We say look at the other cases. Look at everything. The public deserves that.”

Levin also wants a full audit of the state’s Unemployment Insurance contingent fund.

That fund includes penalties and interest paid by those accused of fraud. Those have grown from a little over $3 million in 2011, to about $155 million this year.

The fund “needs to be transparent,” Levin said. “Come forth with all the information, and make sure all citizens are treated fairly.”

The state legislature just tapped $10 million from that fund to help balance the state budget.

Michigan has already repaid $5.4 million to those wrongly found guilty of fraud, but Levin says that strikes him as a “small amount” when compared to the amount seized from unemployment applicants.

Dave Murray, a spokesman for the Unemployment Insurance Agency, sent the following statement in response to Levin's remarks:

"We’ve already made some changes to the fraud detection process, and we appreciate that the state Legislature this week approved a bill that codifies the reforms we’ve set in place.

"People come to the UIA when they are facing a difficult time, and we want to make sure they get the benefits they are entitled to as they seek new jobs. We will continue to work on ways to improve our services so those that deserve benefits will get what they need during trying times, while remaining vigilant in terms of fraud.

"As of August 2015, the UIA no longer uses the automated system to issue fraud determinations. Instead, trained staff investigates, reviews and makes the determination in all fraud cases, which includes the additional step of contacting the claimant and/or employer for additional information if needed."