Michigan House Republicans float plan to increase oversight, access at unemployment agency

Beth LeBlanc
The Detroit News

Lansing — Michigan House Republicans laid out a plan Tuesday to resolve issues at the Unemployment Insurance Agency that have delayed payments or generated overpayments on ineligible or fraudulent claims. 

The plan, which includes several bills currently being drafted, would create an independent citizens' advocate to serve as a point of contact for residents who need help.

The UIA would be required to provide that advocate information on its internal appeals process, including a tally of cases currently under appeal, and accurate data on the status of the Unemployment Insurance Trust Fund.

The legislative package also would limit the agency to one year to collect improperly paid benefits, unless the benefits were involved in a fraud investigation. The bills would require the agency to complete review and determinations of claims within 10 business days and provide complete case files to administrative law judges hearing an appeal.

The agency has admitted mistakes over the past several months but also defended its actions as a confluence of pandemic circumstances and a system that was broken and understaffed prior to the pandemic.

The agency has been a regular focus of recent House Oversight Committee hearings that have shown a lack of leadership and some mismanagement at the agency, said Rep. Steve Johnson, the Wayland Republican who chairs the oversight committee. 

Those management issues are best sorted out by Gov. Gretchen Whitmer's administration, Johnson said, but the committee did find other areas where the Legislature could intervene and craft laws to protect legitimate claimants.

"The agency doesn’t work with the people and that has to change," Johnson said at a press conference Tuesday. "We have to fix the customer service going on at the agency.”

The agency said Tuesday it hadn't had the chance to review any of the plans to determine what effect they would have.

"As always, UIA leadership is open to discussions on processes and procedures that will efficiently and effectively serve jobless claimants as well as being open to working cooperatively with the Legislature and maintaining compliance with our federal partners to better serve the residents of Michigan," said Nick Assendelft, a spokesman for the agency.

House Democrats on Tuesday said they'd been working to fix the jobless aid agency "for years — long before the pandemic made it a necessity."

"I’m glad our colleagues on the other side of the aisle have joined the conversation and are interested in exploring ways to provide real relief for Michigan families," House Democratic Leader Donna Lasinski of Scio Township said in a statement. "I look forward to examining their recent proposals carefully.”

Republican lawmakers at Tuesday's press conference expressed frustration with the current system and said their staff has been overwhelmed with calls for help from constituents. It was understandable at the height of the pandemic, but the calls, delays and confusion have continued for months now, Johnson said.

"Michigan stands apart in how bad it has been," he said. 

Rep. Michele Hoitenga, R-Manton, said her staff members have become defacto employees for the jobless agency during the pandemic.

Rep. Tommy Brann, R-Wyoming, said he has even paid some constituents advances on their jobless aid because they were in such a bad way.

"I had to because some of them couldn’t afford to go to Meijer's to pick up food,” Brann said.

The legislation being drafted stemmed in part from the phone calls that have inundated lawmakers' offices, a sign the individuals could not get through to unemployment offices, said Rep. Jack O'Malley, R-Lake Ann. 

"We’re beginning to go from problem to solution," said O'Malley. "…This is how government should work. We have heard from the people, provided oversight and are now delivering accountability.”

The package of bills comes after more than a year of issues at the Unemployment Insurance Agency as it struggles to balance record claims, unprecedented attempts at fraud and changing federal guidelines during the pandemic. 

Some claimants have waited months to get any kind of payment from the agency. 

Under former Director Steve Gray, the agency temporarily dismantled some of its security systems to get claims through more quickly at the height of the pandemic. But it also opened a doorway further for fraudsters to access the system. 

More than two dozen people have been charged so far in the state and federal investigation into the matter, which could have resulted in "hundreds of millions" of improperly paid benefits. 

In January, the federal government met with UIA officials to notify them that they'd formulated illegitimate reasons for qualifying for some federal unemployment benefits. The federal monitors formally told the agency in February that they'd need to rectify the issue but the agency waited until June to notify recipients. 

The June mailing included 648,100 letters to recipients to notify them that they would need to re-attest to their eligibility for the benefits they'd already received and, if deemed ineligible, pay those benefits back. Another 42,092 letters were sent to recipients who had been denied benefits under the old qualifying reasons and might now be eligible. 

Whitmer has said she would seek waivers for those who were deemed ineligible under the new qualifying reasons.

Other legislation has sought to address problems that have arisen at the agency over the pandemic. 

Sen. Jeff Irwin, D-Ann Arbor, is moving legislation through the chambers that would stop the agency from demanding reimbursement for benefits it paid to part-time workers.

The legislation addresses a conflict between state law, which bans the agency from giving jobless aid to part-time workers, and federal pandemic unemployment aid, which made the assistance available to part-timers. Michigan paid out the aid to countless part-time workers but now is attempting to get them to pay it back. 

Rep. John Damoose, R-Harbor Springs, has introduced legislation that is a little more sweeping than Irwin's. His legislation would stop the agency from demanding reimbursement for payments it made due to an agency error. 

Both Irwin's and Damoose's bills are up for House committee hearings Thursday.

The most recent budget the Legislature sent to Whitmer includes the continuation of an additional 500 full-time employees for the agency — an increase in staffing authorized during the pandemic —  and about $4 million for the agency's unemployment insurance benefit claims monitoring and fraud detection unit. The budget places about $150 million in coronavirus relief funds into the unemployment compensation fund, a fund financed by business taxes, in order to replace the money paid out on fraudulent claims during the pandemic.

The budget also contains language requiring the department to report quarterly on the 4-week average of claimants, certifications and claims paid as well as the amount of tax money put into the unemployment trust fund and its balance at the end of the quarter. Another section requires the UIA to use some of its funding to staff unemployment offices for in-person appointments.