350,000 residents asked to requalify for jobless aid failed to respond

Lansing — The majority of Michigan unemployment claimants asked to clarify their qualifications for aid likely won't have to repay any benefits they received due to a state error, a state agency said Friday.

In late June, hundreds of thousands of jobless aid recipients were asked to file additional paperwork after the state warned they might have to repay benefits because of unapproved qualification criteria developed by the Michigan Unemployment Insurance Agency. The state said it mailed out nearly 690,000 letters — 648,000 to people who had already received aid and 42,000 to people who had been denied aid but may qualify under new federal criteria.

The affected claimants were part-time, self-employed or gig workers who wouldn't normally qualify for benefits but did qualify for pandemic unemployment assistance.

About 350,000 people failed to respond in time to the state's request, but they still won't have to repay any money even if they were overpaid, the UIA said in a Friday press release. The state contended many of the 350,000 might be individuals who have stopped receiving benefits.

Another 241,000 individuals asked to requalify did respond to the state and their requalifications are being processed, the state agency said. It's likely those respondents also won't have to repay any money even if some of them didn't originally qualify after Gov. Gretchen Whitmer said earlier this month she would ask the federal government for waivers for claimants "who followed the rules and received benefits through no fault of their own."

“For those who did not respond, we want to assure them that claimants who are no longer eligible won’t have to return the money they received when, through no fault of their own, they chose one of the four non-eligible reasons," said Liza Estlund Olson, acting director for the unemployment insurance agency. 

The remaining roughly 99,000 notices for which the state did not provide status updates include additional mailings for individuals who "received multiple requalification letters based on their case," agency spokesman Nick Assendelft said.  

Conservative group Michigan Rising Action criticized the timing of the news, which was released at about 3 p.m. Friday, and called again for a former Whitmer administration unemployment agency director to return $85,872 that was part of a separation agreement that also required he "maintain confidentiality."

"This was an error made by the state, under the leadership of Steve Gray, who was given $86,000 to leave his job," the group said on social media. "He must repay his golden parachute ASAP."

The statement from the agency came after the state mailed 648,100 notices in late June to inform claimants that they would have to submit new self-attestations to verify their eligibility for federal pandemic unemployment assistance. 

The new paperwork was required after eligibility criteria the state developed early in the coronavirus pandemic for Pandemic Unemployment Assistance benefits was rejected by the U.S. Department of Labor earlier this year. Instead, the Department of Labor issued three new federal criteria an individual could mark.

The additional federal qualifications also mean about 42,092 residents denied pandemic unemployment assistance can reapply to see if they meet the new standards. 

In the agency's late June letter, the state unemployment agency indicated those found ineligible under the new criteria would be evaluated to determine whether they owed money and whether the state would seek to waive repayment.

Unemployment benefit advocates have speculated that the agency didn't have to send out the letters in the first place, theorizing that the Department of Labor guidance was that states should determine retroactively whether new people qualified, not to disqualify people who had already received payments.  

"I’m just not convinced that the state needed to cause themselves this headache," said Rachael Kohl, director of the workers' rights legal clinic at Michigan United.

Kohl said the incident was reminiscent of overly restrictive pre-pandemic unemployment policies and a Snyder administration software debacle between 2013 and 2015 that accused people falsely of fraudulent unemployment filings. 

"This is the same type of decision making that led to the false fraud scandal — an over-restrictive, clawing back approach to benefits,” she said.

The 690,000 notifications have also led to frustration from lawmakers who have been fielding constituent calls for nearly a year and a half. 

GOP Rep. Steve Johnson, the Wayland Republican who chairs the House Oversight Committee, said his committee will open an investigation into the Unemployment Insurance Agency, and on Thursday, he released information on a form that the 648,100 people who received a request for re-attestation can fill out. The form appears to be capturing information for lawmakers to understand the breadth of the issue.

“We need to provide people with a voice and ensure those voices are heard," Johnson said in a statement. "Right now, they’ve simply been handed a letter by the state, and the onus is on them to make sure they don’t owe the state any money because of the state’s mistake."

eleblanc@detroitnews.com