House panel plans to overhaul jobless insurance agency

Michael Gerstein
The Detroit News
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Lansing — A state House committee plans to vote next week on an eight-bill package aimed at overhauling how the state’s Unemployment Insurance Agency deals with fraud, the panel’s chairman said Thursday.

The state has admitted to making nearly 48,000 false fraud accusations against people applying for jobless benefits and paid residents back $20.8 million for money taken in error. Now, after a lengthy period of negotiation, House Republicans have proposed policy changes they say will fix the agency’s lingering problems.

The plan is meant to make it easier to fight unemployment identity theft, reduce some fraud fines, extend access to a state program that offers help at initial fraud hearings, require new reports to the Legislature and hire an unemployment agency ombudsman.

House Oversight Committee Chairman Rep. Joseph Graves, R-Linden, said he intends to advance the package to the full House by next Thursday after taking testimony on the plan following what he said were 900 hours of negotiation between interested groups.

Most of the changes outlined in the predominately GOP-sponsored package are not directly aimed at helping victims of false fraud accusations.

Two Democrats sponsored bills in the package, but Democrats have a competing plan that would reimburse victims of false fraud allegations for lost benefits, penalties and legal fees in addition to increasing the penalty on employers that are more than 30 days behind on paying unemployment taxes. It’s unlikely to go anywhere in a Republican-controlled Legislature.

The false fraud scandal has clouded Gov. Rick Snyder’s administration since at least late 2016, when the agency reversed an initial batch of 20,965 bad fraud determinations made by the computer system during a review first requested by U.S. Rep. Sander Levin, D-Royal Oak.

As The Detroit News previously reported, the state not only wrongfully demanded repayment of the original benefits, but also automatically applied a 400 percent penalty, plus interest.

Michigan reversed more than 80 percent of the fraud determinations it made using a $47 million automated computer system called “MiDAS” to cut costs in 2012. The agency laid off about 400 people as the computer took over.

Graves said the plan in the Oversight Committee has the blessing of House Speaker Tom Leonard, R-Dewitt.

Graves also said he believes it strikes a balance between safeguarding employers and employees from past trouble involving unemployment insurance. The plan has a heavy focus on fighting identity theft involving unemployment benefits.

“If you’re stealing someone’s identity you should be punished to the maximum,” Graves said.

The AFL-CIO was critical of certain aspects of the package but ultimately supportive. All of the bills are tie-barred, so they must be considered in all-or-nothing fashion.

“These bills are by no means comprehensive nor are they perfect,” said Stephanie Glidden, director of public affairs for the AFL-CIO.

But Glidden said she thinks they “will result in a fair UI system.”

Wendy Block, a lobbyist for the Michigan Chamber of Commerce, said the package is the result of compromise and called it a “fair” deal for both employers and employees.

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