State expands review of false fraud charges against workers

LANSING — The state’s embattled unemployment agency promises to review all computer-identified claims of benefits fraud — more than 30,000 — that until now have not been re-examined after criticism from state auditors and a Michigan congressman that the practice was highly inaccurate.

The Michigan Unemployment Insurance Agency said Friday the fraud findings occurred from 2013 to 2015, when it launched an automated system to determine fraudulent claims. The agency hasn’t relied solely on a computer system to identify possible fraud cases since August 2015, and now includes staff members in the review process.

News of the additional reviews comes a day after the state’s Talent Investment Agency said it will perform a top-to-bottom restructuring of the unemployment office, which it oversees — including reassigning its director, Sharon Moffett-Massey, and launching a national search for her successor.

“We are being as thorough as possible in reviewing potential fraud determinations because we want to be fair to people filing claims, but also continue to be vigilant against fraud, which hurts everyone,” said Wanda Stokes, director of the Talent Investment Agency, in a statement.

Bruce Noll, the talent agency’s legislative liaison who is leading the unemployment agency on an interim basis, has started the process, Stokes said. About 7,000 of the roughly 30,000 cases already have been reviewed, the talent agency said Friday.

U.S. Rep. Sander Levin, D-Royal Oak, has been one of the most vocal critics of the agency’s reliance on automated fraud determinations. In December, Levin released data from  the state unemployment agency, which indicated it reviewed 22,427 cases of fraud determinations out of a total 53,633 cases made by a computer system between October 2013 and August 2015. Of those reviewed, just 1,462 — or slightly less than 7 percent — were confirmed fraud cases, Levin said.

The agency’s review returned $5.4 million to more than 2,500 claimants, data show.

In a February 2016 report, Auditor General Doug Ringler found that fraud was discovered in just 8 percent of appealed benefits claims.

In a statement Thursday, Levin said Stokes’ restructuring changes were “long overdue.”

He said Friday he was “very pleased” to hear of the planned fraud reviews, adding: “It is important that the Talent Investment Agency has announced a full review of all cases to ensure that anyone wrongly accused of fraud is made whole and has their record corrected.”

More challenges ahead

Despite the additional oversight, a spotlight will continue to shine on the unemployment agency as it tries to fix problems of fraud and poor customer service.

A potential class-action lawsuit is awaiting oral arguments in the Michigan Court of Appeals, alleging the state garnished wages and seized tax refunds on behalf of tens of thousands of plaintiffs falsely accused of benefits fraud.

And Gov. Rick Snyder has just days remaining to sign two bills on his desk related to the agency, including one that would approve the transfer of $10 million from a fund containing money for the unemployment agency to the state’s general fund for the fiscal year that started Oct. 1. Opponents of that bill say they want him to veto it on the grounds that the money was wrongly taken from jobless workers, citing the untested cases.

Still, Stokes’ three-point reform plan — which will make a priority out of customer service and fraud prevention — is a step toward resolving longstanding complaints, say some business groups and attorneys who have called attention to problems inside the agency.

Ringler, in an April audit, found that the unemployment agency failed to answer nearly 235,000 phone calls — 89.1 percent of all calls placed — during business weeks that ended Aug. 22, 2014, and Sept. 22, 2014. Callers gave up on nearly 29 percent of the calls while waiting to be connected with an employee — despite phone upgrades made since 2011, auditors said.

The unemployment agency said those numbers were call attempts, not unique callers; 48 percent of unique calls were unanswered in the selected weeks. The agency also said the unanswered volume improved to 21 percent of total unique calls during the corresponding weeks of 2015.

Employers in Michigan, who pay unemployment taxes to support the system that pays benefits to jobless workers, say they, too, have had trouble connecting to a live person on the other end of the phone line.

“Once we can get the person to the right person at the agency, we’ve found that they often get what they need,” said Wendy Block, director of health policy and human resources for the Michigan Chamber of Commerce. “We are encouraged by the changes that were announced … simply because they are focused on customer service.”

Block said she believes the restructuring signals the agency is serious about addressing the problems. She hopes its new leadership will focus on preventing identity theft, another contributor to fraudulent claims.

The departure of Moffett-Massey, who led the Unemployment Insurance Agency since 2014, could lead to other administrative changes as Stokes overhauls the agency’s operations. She said she soon plans to update a phone switchboard system to reduce wait times for callers.

Stokes said companies needing information about filing taxes or resolving other issues should expect improvement in the agency’s availability and timeliness going forward.

The agency reports that about 213,000 employers contribute to the system, which collects about $1.4 billion annually in unemployment taxes. It paid more than $1 billion in benefits on more than 600,000 claims in the 2014 fiscal year, according to audit reports.

Focus on fixing problems

Stokes, who moved to the talent agency from the Michigan Department of Licensing and Regulatory Affairs in July, said she spent three to four months examining the unemployment agency, visiting offices and talking to hundreds of staffers to learn more about the organization’s challenges.

Her plan will focus on improving customer service via phone, online and in person, including updating signs at agency offices; increasing internal efficiency, transparency and accountability; and working to protect unemployed residents filing claims and employers who pay taxes into the system both from fraud and being wrongly accused of fraud.

“How can we do it better? That’s been my focus,” she said, “and this is a result of what I’ve seen so far. It’s the right time to make this decision and to start moving ahead.”

She added: “Not to place blame, not to talk about what happened in the past, but identify what those problems are and then fix them.”

Jennifer Lord, an attorney with Pitt, McGehee, Palmer & Rivers PC in Royal Oak and the lead attorney on the potential class-action case in the state appeals court, said she wants the state to freeze any action that might take money out of the so-called “contingent fund” that includes unemployment funds and put it into the state’s general fund until the agency knows for certain whether there are more false allegations of fraud.

Senate Bill 1008, which would approve that transfer, is pending on Snyder’s desk. Snyder spokeswoman Anna Heaton said the governor has not yet completed a full review of the bill.

Lord contends the funds don’t belong to state taxpayers and should not be used to balance the budget.

She said she is awaiting a date for oral arguments in the Court of Appeals related to a pending class-action lawsuit that could include an estimated 60,000 plaintiffs. The case originated in the Michigan Court of Claims.

“I hope it’s a step in the right direction,” Lord said of Stokes’ restructuring plan. “There are clearly still massive, massive problems at the agency.”

Snyder also has not yet signed a bill that passed unanimously in the House and Senate that would prevent the state from determining fraudulent claims without first being reviewed by a person.

Heaton said Snyder likely will sign it, “given that it codifies changes the UIA has already made to improve the unemployment system.”

Anticipated changes

The agency also will change the way it accounts for uncollected unemployment taxes, Stokes said. Previously, a decision on whether an employer’s taxes could be collected — particularly in cases when a company has gone out of business or left the state — didn’t always occur, she said. That led to inaccurate accounting for tax revenue that never was going to be collected.

About 20 percent of anticipated tax collections were written down as uncollectable as part of this process, an agency spokesman said. Going forward, the agency will look at those cases on a quarterly basis and decide annually whether that money will be received, Stokes said.

Moffett-Massey will work on special projects within the Talent Investment Agency, including work with Michigan Works agencies, Stokes said. A new unemployment director is expected to be hired this year.

Moffett-Massey makes $139,800; the range for the director position is $113,000 to $143,000, according to the agency.

“We’re making some changes that are going to allow us to use her talents and skills in a better way and we’re going to get some fresh eyes on the organization,” Stokes said in an interview. “I’m going to allow the new person to come in and take a look at our structure, look at how we’re doing things, and then make the appropriate adjustment so that we’re doing our job the best way that we can.”

About The Author

Lindsay VanHulle

Lindsay VanHulle covers business and Lansing for both Bridge and Crain's Detroit Business. She can be reached here. 

Comment Form

Add new comment

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

Minimal HTML

  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

Comments

Rick
Mon, 01/09/2017 - 9:15am

Watch how once again the governor and no top officials are responsible or accountable in any way. Watch Billie Schuette go after the little people again.Just like at Wells Fargo with the fake accounts - it's just those pesky workers who were totally responsible and accountable while the CEO and department heads knew nothing about it. And then they got golden parachutes instead of handcuffs in the end.

Bernadette
Mon, 01/09/2017 - 2:24pm

Rick, I could not agree with you more. The lack of transparency and accountability fuels this fire of corruption in State Government. This is what you get when you have a "business nerd", trying to run a government, and can blame everyone else, instead of taking responsibility. Bill Schuette is waiting until closer to the election run to bring charges on Snyder, thinking this will show how competent he was as AG. Of course all of us citizens will just rise up and applaud him. LOL

Rich
Mon, 01/09/2017 - 10:52am

If you are looking at a way to prevent fraud and simplify the process, why have the government involved at all. Today, the employer pays into a fund, the government administers the fund, and disperses money to a laid off employee. What if there was a law that said if an employer lays off an employee, then the employer is responsible for paying the laid off employee $XX per week/month or however it is calculated today. The employer surely knows when unemployment is due an employee, and if this money was theirs as opposed to a government fund, there would be an incentive to eliminate fraud. The employers surely could keep track of everything back in the days when there was a jobs bank. So why not now?

Jo
Mon, 01/09/2017 - 11:50am

I would like the approval process investigated also. During the years stated above, I had to lay off a long-term part time employee. He was turned down for unemployment benefits because he didn't make enough money. This man worked here for many years and deserved the help he could have gotten from unemployment benefits while he got his feet back on the ground. Now I am thinking a computer made the determination and that is why I received no reply to the protests I filed. Around the same time I had an employee who worked here as a side job to earn some extra money while she also worked as teacher. She ended up leaving us after a few months and then got laid off of her teaching job. UIA took money from my account to help pay her unemployment. Those protests did not get any response either.

Jo
Mon, 01/09/2017 - 11:53am

I forgot to state that the company paid in benefits for the man who was turned down for all the years he worked here but because of the short amount of time she was here we only paid in for one quarter for the laid off teacher. Yet we were forced to pay for the teacher and were not able to give the man what he deserved.

Mon, 01/09/2017 - 1:07pm

Why would Governor snyderly take money from the unemployment fund?Answer: That's what nerdish republicans do every time. Take from the needy and give to the governor's outside hired legal fund so far payed for by Michigan citizens or to the two \{2\} new Michigan monopolies - dte and consumers power. Its really only fair to use the Michigan citizens money to pay back all the money to dte and consumers power who payed to their bought and payed for re-election of the republicans who voted to make Michigan's new monopolies of dte and consumers power. The same republican politicians who voted with one hand and took bribe money with the other hand to vote for the monopoly.Hopefully the republican 8 year reign of pillaging Michigan's Citizens tax payor money to pay to the rich ceases when voters vote out the republicans who shamelessly hurt Michigan's State future plus our children's and grandchildren's future.

Sally Schwantz
Mon, 01/09/2017 - 7:21pm

Moffett-Massey will work on special projects within the Talent Investment Agency, including work with Michigan Works agencies, Stokes said. A new unemployment director is expected to be hired this year.Moffett-Massey makes $139,800; the range for the director position is $113,000 to $143,000, according to the agency.\'93We\'92re making some changes that are going to allow us to use her talents and skills in a better way and we\'92re going to get some fresh eyes on the organization,\'94 Stokes said in an interview.Fresh eyes?These 2 keep flip flopping jobs, at least one worked for ASI-Amway. Follow DeVos...

Waterboy
Tue, 01/10/2017 - 7:57pm

No one is going to vote anyone out until we redistrict and put an end to gerrymandering which insures the safety of incumbents tenure.

MPS
Thu, 01/12/2017 - 10:03am

Just what ARE Moffett-Massey's talents and skills? Perhaps she should be applying for unemployment comp so she can analyze how the system works from the outside.

Tony
Mon, 01/16/2017 - 5:23pm

Well said. How do you stay on the payroll at a six figure salary when the organization you ran is so bad? The whole story of the State stealing money from laid off workers sounds like a Mob racket. It's so embarrassing to live in Michigan.

John Hutchinson
Tue, 01/17/2017 - 11:54pm

Unbelievable the republicans are beyond belief! Why isn't she held accountable for her mishandling of this mess, o like the governor with his handling of flint water there is no accountability for the republicans in michigan, if the dems did this the republicans would talking about jail but it's just a little mistake for them! They don't even lose their high paying jobs unbelievable! How come the little guys and hard working poor are treated like they don't count. Look out Michigan the republicans are above the law. Look how the governor took the medical marijuana and made your landlord your doctor, they decide if you get get to use your medication! The voters voted to make medical marijuana legal,but the republicans and governor decided that they should decide not your doctor unbelievable! Please don't let them get away with this again marijuana should be legalized and republicans held responsible for their actions and mistakes!