Michigan’s Unemployment Agency Falsely Detected 20,000 Cases of Fraud

If you thought the Flint water crisis was the only time the Michigan government had completely screwed over its citizens, think again.

A recent review shows the Michigan unemployment agency (UIA) falsely accused people of fraud in more than 20,000 cases over a two-year period, resulting in people being wrongly denied unemployment benefits and facing fines of up to $100,000. Now, the state wants to use the money it wrongfully took from its poorest residents to balance its budget.

The review examined 22,427 cases in which the UIA’s automated computer system detected fraud. Of those cases, a shocking 93 percent were false accusations. Some instances may have included repeat claims for benefits, so it’s unclear exactly how many people were affected. Still, it’s likely thousands of people were wrongfully denied unemployment benefits and accused of fraud, an experience that’s not only a financial blow, but also a humiliating slap in the face.

The claims in question all took place between between October 2013 and August 2015. After federal officials expressed concern with the system, known as Midas, the UIA revised its policies in 2015. Now, when Midas detects fraud the claim must be reviewed by an employee.

But plenty of damage was done before the policy update, and there may be more to come.

The review did not include all the fraud accusations made between 2013 and 2015. There are still 30,000 which have not been examined.

Claimants accused of fraud lost unemployment benefits, faced enormous fines and even had their taxes garnished. Bankruptcy filings increased in the state during this period and many were afraid they’d lose their homes after being denied unemployment benefits. Many people didn’t realize they could take action to appeal the fraud allegations, but those who tried faced long, bureaucratic hurdles.

“There’s no recourse from the state on what they’re doing to people’s lives,” said Kevin Grifka, who was falsely accused of fraud and had his entire federal income tax garnished just before Christmas 2014. “That’s my biggest problem with all this.”

More than 2,500 people have been repaid a total of $5.4 million to correct the mistake. However, this is likely a fraction of what was collected in fines.

The state’s unemployment contingency fund, which is mostly funded by the fines from fraud claims, ballooned since 2011 from $3.1 million to $155 million. Midas was implemented in 2013. What’s worse, the state legislature just passed a bill to use $10 million from this fund to balance the state’s budget.

“It’s literally balancing the books on the backs of Michigan’s poorest and jobless,” said attorney David Blanchard, who’s representing some of those affected in a class action lawsuit.

This budget bill is part of a continuing pattern of the Michigan state and city governments forcing the state’s poorest and most vulnerable citizens to shoulder the burden of the government’s failures.

In Detroit, hundreds of thousands of residents have had their water shut off during the last two years leaving some households without water for months at a time. Businesses with past due water bills have been mostly left alone, including the Michigan state government which owed $5 million. Water bills in Detroit are twice the national average, leaving many poor citizens unable to keep up with payments.

In Flint, where over 40 percent of residents live in poverty, many people are still waiting for clean water to replace the poison running through their pipes after the government changed their water source to save money.

Photo Credit: Caron

54 comments

Marie W
Marie Wabout a year ago

Thank you for sharing.

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Chad Anderson
Chad A1 years ago

Let's lay off those in need and start denying benefits to those corporations getting the big bucks in their time of greed.

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heather g
heather g1 years ago

It's almost as if there is pride in being inefficient - yet the average person suffers.

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Maureen K
Maureen King1 years ago

Thank you Kay M and John Casablanca. Very well said..
Wishing all commenters on site a very happy,healthy and peaceful New Year.
Been off for a while with site problems and knee
issues . Hopefully back on deck. Cheers and best wishes.

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Maureen King
Maureen King1 years ago

What an incredibly sad state of affairs.Like those already living in poverty don't have enough to contend with. I'm pleased to see that there is going to be a class action. Those who failed the people affected need to be held responsible and their benefits restored as soon as possible. Disgraceful.

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Naomi D
Naomi Dreyer1 years ago

Oh my.

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Siyus C
Siyus Copetallus1 years ago

Thank you for sharing.

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Margie F
Margie FOURIE1 years ago

Fraud is everywhere

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William C
William C1 years ago

Thanks.

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Leo C
Leo C1 years ago

Thank you for sharing!

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