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Lansing — Michigan legislative Democrats said Tuesday they plan to introduce a package of bills meant to make amends for the thousands of Michiganians wrongfully accused of fraud and other problems at the state’s Unemployment Insurance Agency.

Senate and House Democrats said they want a broad overhaul to the state’s unemployment system. The Republican Snyder administration has reversed 20,965 robo-fraud determinations made between October 2013 and August 2014 and refunded claimants $5.4 million in wrongfully garnished wages.

The state is now reviewing another 28,000 cases from the same period that it says involved both computer and staff, a process expected to take six months. Because some people are involved in multiple cases, the agency says about 39,600 individuals were affected in some way.

A jobless system glitch also may have inadvertently compromised the Social Security numbers of nearly 1.9 million people after a bad software update allowed unauthorized viewers in the system to see more information than is intended.

Democrats said Gov. Rick Snyder was not doing enough to make things right for victims of a rogue computer system that made fraud determinations without any human review. The agency has since stopped using that fully automated system.

“If you stole money from people in any other business, you would be fired,” House Minority Leader Sam Singh, D-East Lansing, noting former UIA Director Sharon Moffett-Massey was instead reassigned to another state position.

But Democrats and lawyer Jennifer Lord, who brought a class-action lawsuit against the state over the fraud determinations, said the agency is still wrongfully garnishing people’s wages even after a settlement with victims.

Moffett-Massey at first bristled at suggestions of widespread agency problems but a review confirmed the mistakes.

Senate Minority Leader Jim Ananich, D-Flint, called the problems “unconscionable” and said the legislation is meant to make those affected “100 percent whole” again.

Talent Investment Agency Director Wanda Stokes said Tuesday she welcomes working with legislators to improve the Unemployment Insurance Agency, adding that politics shouldn’t be allowed to distract from these efforts.

The coming legislation would require the state to pay interest fees in restitution for any wrongfully garnished money. The package also would cover legal fees associated with trying to fight phony fraud charges, increase the penalty on employers that are more than 30 days late with unemployment tax payments, increase the statute of limitations on false fraud claims, require the department to help victims of identity theft if their information was exposed by the latest security breach.

The bills also would increase unemployment benefits.

Singh criticized Snyder for sticking with the same vendor — Colorado-based Fast Enterprises — developing a system that led to the bad fraud determinations and supplying a software update glitch.

That same company is also under consideration for a $75 million bid to overhaul the Michigan Secretary of State Department’s computer system. The State Administrative Board has delayed the contract citing concerns over the company’s role in problems at the unemployment agency.

Singh said a bill meant to fix agency problems at the agency that Snyder signed into law last year didn’t do enough because “it doesn’t deal with the inequities in our system.”

Singh and Ananich say they hope for bipartisan support of the package, but they have not talked with Rep. Joe Graves, R-Argentine Township, who is chairing a House committee examining unemployment issues.

“This scandal has had families go into bankruptcy while some employers have evaded paying into the system with limited consequences,” Singh said. “Legislative Republicans have been more interested in removing unemployment protections than fixing this broken system.”

Graves said Tuesday his committee is considering reducing the unemployment fraud penalty, potentially repaying those who already paid attorneys to defend them in wrongful fraud cases and other ways to improve the system so innocent people aren’t ensnared in the same issues.

Those goals are part of Democrats’ plan, but Graves said he has not yet seen their proposed legislation and confirmed he has not been contacted about it.

Graves said Monday he is not looking to “point fingers” but to find solutions as he holds hearings this week and next week to hold agency officials accountable.

“I find these errors unacceptable and have taken immediate steps as chair of the House Oversight Committee to investigate these mistakes, shed light on the process, and protect Michiganders,” he said in a statement. “I am making this a top priority for the committee and am in the process of gathering a bipartisan work group to find answers to protect people who seek help through the Unemployment Insurance Agency.”

House Speaker Tom Lenard spokesman Gideon D’Assandro said Republicans are working to address problems at the unemployment agency.

“Speaker Leonard is committed to getting answers and getting to the bottom of this,” D’Assandro said.

“Over the past couple of months, House Republicans have been working to get to the bottom of the issue and find out what went wrong,” he said. “That includes House Oversight Committee Chair Joe Graves’ bipartisan work group of experts and the hearings he has scheduled this week with the state's Auditor General and next week with the Unemployment Insurance Agency, where the latter will be asked to answer for what went wrong in a public hearing for the first time.”

mgerstein@detroitnews.com

(517) 371-3660

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