The Michigan Court of Appeals recently ruled against the state’s Unemployment Insurance Agency in favor of the claimant, Suzanne Lawrence, in a dispute over $158. The agency claimed the amount was wrongly paid to her in unemployment benefits in 2015 and demanded repayment. Two years and $15,000 in legal expenses later, the Appeals Court wrote, in a scathing opinion that the case was moved forward “without even a scintilla of evidence on the record” to support the state’s position. Despite the severity of the rebuke, a spokesman for the state agency indicated that “No decision has been made on whether to appeal the Court of Appeals’ ruling to the Supreme Court.”
At a 2015 Senate Committee hearing, Rory Mattson of the Delta Conservation District testified that private landowners were being denied permits by the state Department of Natural Resources to put in private roads or ponds without any basis in state law. He told the committee of one landowner who spent $25,000 in legal fees to put a road on his own property.
What these stories have in common is a familiar pattern of abuse by state agencies when it comes to resolving matters of disagreement with citizens and taxpayers. The current approach by state departments and agencies when there is a dispute over an issue, regulation, or law is to tell a citizen that if they don’t like the state agencies determination they can “take it to court.” Agencies use this tactic in place of good faith negotiation because they know that most taxpayers and citizens must settle because they do not have the financial ability to fight the state (which has an almost unlimited supply of taxpayer dollars to spend on litigation) in court. Often, state agencies will fight a losing case all the way to the Supreme Court in an attempt to run the other party out of money.
While existing law does require a state agency to pay the court costs of a prevailing party in a lawsuit, the way the current language is written limits this provision to cases that are considered “frivolous” and the burden of proof for that is on the party that just incurred all the legal fees to win. In other words, the state rarely pays a dime in legal fees no matter how ridiculous the case and the citizen can go broke proving they were right.
That is why the National Federation of Independent Business (NFIB) is supporting legislation that would end the unfair advantage that state agencies have when dealing with citizens, taxpayers, and small business owners. Senate bills 100 and 101, sponsored by Sens. Tom Casperson and David Robertson would require a state agency to pay the legal costs of the prevailing party when that state agency loses a lawsuit. The legislation is a reintroduction of bills approved last year by the Senate but not the House of Representatives.
The change in current law made by these bills would encourage state agencies and departments to work with permit applicants, property owners, taxpayers, citizens, and business owners to resolve issues rather than have department staff present constituents with an ultimatum — do what the department wants or else take their case to court and incur steep costs — even if they prevail.
Charlie Owens is state director for the National Federation of Independent Business - Michigan.