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After falsely accusing thousands of Michiganians of fraud, the state’s Unemployment Insurance Agency is still dealing with the legal repercussions. A recent Michigan Supreme Court decision offers some hope for these citizens who still feel the state hasn’t properly compensated them for its indefensible errors.

The state’s high court found that two of three plaintiffs in the case — which has the potential to turn into a class-action suit — filed their claims against the Unemployment Agency in the proper six-month time frame under Michigan law.

In his majority opinion, Justice Stephen Markman wrote: “We hold that the ‘happening of the event giving rise to the cause of action’ for a claim seeking monetary relief is when the claim accrues, and a procedural-due-process claim seeking monetary relief accrues when the deprivation of life, liberty, or property has occurred. In the instant case, plaintiffs were deprived of their property when their tax refunds were seized or their wages garnished.”

The case now returns to the Court of Appeals, which had formerly dismissed the lawsuit on the technicality of when the plaintiffs filed their claims. That court had ruled the six-month window for suits seeking financial damages from the government started when the falsely accused received the first notice of fraud.

More: Lawsuit over false fraud fiasco revived by Michigan Supreme Court

The Supreme Court, however, unanimously agreed that clock started when the state seized the plaintiffs' property — in the form of wages and tax refunds.

The Unemployment Agency’s actions caused serious problems for more than 40,000 individuals who were already facing a tough time in their lives. 

From 2013 to 2015, the agency used a computer system to root out suspected fraud, without human review, and it’s that faulty program that led to the thousands of false determinations.

The Unemployment Agency has made changes in recent years, and in 2017 it said it was refunding falsely accused claimants more than $20.8 million. By last fall, most of the refunds had been processed, although earlier this year Gov. Gretchen Whitmer and Attorney General Dana Nessel sought help in finding 500 additional residents who still had not claimed refunds the state owed them.

So that’s progress, but as the plaintiffs in this case say, the damages they suffered went beyond the refunds.

Although she agreed with the majority, in a separate opinion Chief Justice Bridget McCormack raised questions about the law requiring plaintiffs seeking financial damages to sue within a limited time frame, when dealing with constitutionally protected rights such as due process.

McCormack wrote: “The Legislature may place whatever conditions it wishes on rights of its own creation, including a notice requirement. And courts shouldn’t undermine those legislatively created conditions. But it is the Constitution that forbids the government from depriving a person of his property without due process of law ... Is the six-month, no-exceptions notice provision reasonable when the government has taken a person’s property without due process?”

Those are important points.

As the case makes its way through the courts, the state must do what it can to right this wrong, and ensure nothing like it can happen again.



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