House Dems: Refunding $21M to Those Wrongly Accused of UIA Fraud is Small First Step

Decision to issue refunds comes after months of House Democrats’ calls for action
Friday, August 11, 2017

LANSING — Michigan House Democrats called today’s decision by the state of Michigan’s to refund nearly $21 million to people wrongly accused of unemployment insurance fraud in more than 44,000 cases between October 1, 2013, and August 7, 2015, a small step forward. The decision to issue refunds follows a concerted effort by House Democrats to call attention to the problem, including a plan unveiled in February to fully restore funds to families hurt by false fraud accusations which occurred after the state managed Unemployment Insurance Agency (UIA) switched to a different computer system.

“It’s welcome news that the state finally decided to take a small step to correct the mistakes it made, but it’s unbelievable that it’s taken so long for the Republican administration to own up to the harm that they’ve caused,” House Democratic Leader Sam Singh (D-East Lansing) said. “Hardworking Michiganders who lost their jobs saw their hardship compounded when their state falsely accused them of lying about it. Many of them were slapped with fines and penalties. These families had to go to court to seek justice, and the state fought them every step of the way. The small step taken today to rectify this issue is not nearly enough to make everyone impacted by this fiasco whole.”

The number of people accused of unemployment fraud swelled after the UIA switched computer systems, and it eventually became clear that computer error — not fraud — was to blame. But instead of correcting the problem and refunding families immediately, the state refused to pay them back, and Attorney General Bill Schuette challenged attempts to take the state to court over the matter.

The refunds announced today will repay benefits, penalties and interest, but the state failed to provide any transparency or explain how it arrived at the figure. The refunds will not include additional costs incurred by families, such as late payment penalties and court costs. Many families accused of fraud were unable to make rent or car payments, had their homes foreclosed or were forced into bankruptcy because of the false fraud accusations, and the refunds announced Friday will fail to make those families whole. House Democrats are resolved to continue fighting for those falsely accused of fraud until the state fully restores them and repays all of their expenses.

“Refunding $21 million to some of the Michiganders whose lives have been turned upside down because the state falsely accused them of fraud is just the start of resolving this problem,” said state Rep. Kevin Hertel (D-St. Clair Shores), Democratic Vice Chairman of the House Oversight Committee and a Democratic member of the bipartisan Unemployment Insurance Agency Workgroup. “The governor and Republican leadership have raided the Unemployment Insurance Fund of the money that should have gone to these people who have lost homes and savings, and even been forced into bankruptcy because of the state’s flawed fraud system. The people who have had their fraud determinations reversed, and the people whose cases are in process now must be made whole. We also must to continue the review of cases to be certain that we know the full scope of the problem, and so that no one who has been falsely accused of fraud falls through the cracks.”