Michigan Settlement Reached in Unemployment “Robo-Fraud” Lawsuit

Michigan Settlement Reached in Unemployment “Robo-Fraud” Lawsuit

Blanchard & Walker has obtained a far-reaching settlement with the state of Michigan regarding the past, present, and future handling of unemployment claims in Michigan.  We have fought this fight for nearly two years on behalf of our clients – the UAW, Detroit’s Sugar Law Center for Economic and Social Justice, individual UIA claimants – and on behalf of all Michigan workers.  Today, the Court confirmed an unprecedented settlement and restructuring agreement with the State.  Read it here: Zynda ORD 2017-02-02 Robo Fraud Settlement and Dismissal.   Here are some of the things that we have achieved today on behalf of Michigan UIA claimants: 

1. For those that were issued a fraud determination between Oct. 1 of 2013 and August 7, 2015, the state has promised to review all cases (except those that have received an individual administrative hearing or a bankruptcy hearing or settlement).  That means, if you were accused of fraud in that time and you didn’t get a hearing because you didn’t get proper notice or for any other reason,  the state will be individually reviewing each case.  Under the settlement, New redeterminations are being issued reversing the fraud findings.   If the agency still upholds a faulty fraud finding after individual review, they will be providing notice of that to the claimant along with information on appeal rights.  On cases reviewed so far, fraud findings are getting reversed 93% – 97% of the time!  if that ratio holds up this process can be expected to result in agency reversals (and refunds) for a total of more than 35,000 Michigan workers. The Settlement requires repayment of garnished funds within 30 days of the review.

2. In the lawsuit, Blanchard & Walker had already received a  Federal Court Order putting a stop to collection activity until this review was done.  That order will continue to be enforced and will PROHIBIT tax and wage garnishments for the group of people identified above, unless and until cases are individually reviewed and confirmed.   The review is expected to take up to six months. 

3. The settlement agreement reached today will also put in place specific due process safeguards and procedures to ensure that claimants get appropriate notice of what they are accused of and a meaningful opportunity to respond.   It will end the practice of “income spreading” (assuming wages were earned in weeks that they weren’t) that led to many of the false fraud allegations.  It will require the agency to take real steps to make sure there is a basis to suspect fraud and that they are acting on valid information BEFORE sending out questionnaires. 

4.  The settlement includes important reporting obligations for the Unemployment Agency. As the agency implements these changes over the next 90 days, the settlement will require the Agency to provide new policies and forms to our clients so that we have an opportunity to object if we find them inadequate to protect the basic due process rights guaranteed in the settlement.  Our clients will also receive regular reports of the status of the reviewed cases: how many were affirmed, and how many reversed.   And we will get reports for the next two years on the volume of new fraud findings and redeterminations.

For too long State bureaucrats and their Defenders in the Attorney General’s Office have denied the problem existed and fought for a status quo that treated unemployment claimants as presumed criminals and robbed them of tax returns and income without due process. Our clients are heartened by new leadership who finally acknowledge the extent of the problem and who have recognized that this settlement is this first step, but not the last step, of essential reform to the UIA.  

Blanchard & Walker will continue to update developments on Michigan’s Unemployment fraud debacle on our blog and on Facebook.  We look forward to working with new leadership at the UIA to implement the terms of the Settlement and to refocus the Agency once again on the efficient administration of benefits for Michigan’s Jobless – according to the terms of the Federal Court Settlement.

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