Michigan apologizes for screwing residents. Then fights like hell.

lansing

Whether it’s false fraud charges, poisoned water or abused prisoners, state government too often is not here to help.

mike cox

Former Attorney General Mike Cox: “You don’t want court cases resolved as if they were political deals.”

For well over a year, state officials knew Michigan’s computer-driven unemployment insurance system had wrongly accused thousands of workers of benefit fraud.

That didn’t stop lawyers for the state from working to derail a class action against the Unemployment Insurance Agency. They’ve succeeded – for now – after the Michigan Court of Appeals dismissed the case in July on a technicality, ruling that workers had waited too long to file their claims.

State lawyers have taken the same hard-line approach against individual workers. In one case, the state spent two years and deployed a team of attorneys to pry back $158 in benefits from a seasonal worker at Bloomfield Hills Country Club named Suzanne Lawrence – only to lose when an appeals court ruled in July there was not “even a scintilla of evidence” she had committed fraud.

But these aren’t the only instances in which Michigan has chosen to fight, rather than make things right, when state government has harmed its citizens.

Consider Flint. Government lawyers continue to contest a battery of lawsuits over the state’s role in the lead poisoning of Flint’s drinking water, a crisis that unfolded in 2014 when the impoverished city was under state control.

Michigan tenaciously fights the claims of Flint residents despite the findings of a state-appointed commission, which concluded state government was primarily to blame for the disaster. Thousands of children were exposed to toxic lead levels as a result of state employees’ neglect and refusal to take seriously complaints over contaminated drinking water.

On another front, Michigan aggressively contested allegations of sex abuse of female prisoners by state prison guards, well after the evidence became overwhelming. The class action was finally settled in 2009 for $100 million, following 13 years of litigation and two lost trials. A lawyer for the women said she had earlier offered to settle the cases for one-quarter of the eventually cost.

Few would dispute the state’s right to defend itself in court, or to ensure that damages be limited to residents who truly suffered harm. But the state’s tendency to fight rather than settle cases where the state is clearly, even spectacularly, at fault raises questions about how seriously state officials take their most profound duty: to keep residents safe.

schlanger

University of Michigan law professor Margo Schlanger: “If the state has harmed people, it’s the right thing to make things whole.”

“The state does have an obligation to be a good steward of taxpayers’ money,” said University of Michigan law professor Margo Schlanger, an expert on policies relating to prison sexual assault who followed the abuse litigation. “But it also has a responsibility to people they harm. If the state has harmed people, it’s the right thing to make things whole.”

“Sometimes,” she added, “state officials don’t want to be the one who actually writes the check. They kick the can down the road and leave it for the next guy. That does a real disservice to taxpayers. You spend time and money putting off the result everybody knows is coming.”

Former Michigan Attorney General Mike Cox counters that such broad critiques ignore the singular legal obligations of government lawyers. The first duty of lawyers from the Attorney General’s Office is to protect the interests of their clients – state employees – and more broadly, the taxpayers, said Cox, who served two terms as attorney general, through 2010.

Cox said that duty extends to vigorously defending lawsuits in Flint, even though he said of the crisis, “you can’t find a more gross example of incompetence in my life in anything that’s happened in Michigan.”

That obligation includes ensuring that any taxpayer money paid to lead victims is reasonable and justified. “In the Flint class actions,” Cox said, “a key question here is, ‘What are the damages?’ We don’t know what the damages are. In court cases, you need to rely on the rule of law.

“You don’t want court cases resolved as if they were political deals.”

Andrea Bitely, spokesperson for Attorney General Bill Schuette, said Schuette cannot comment on legal strategy in the Flint lawsuits. She said he is “walled off” from the civil lawsuits as he pursues criminal charges against several state officials involved in the water crisis.

In the worker fraud litigation, Schuette acknowledged in a recent television appearance “there are obviously problems with the unemployment insurance system,” adding: “Most of the time it’s better to solve the problem instead of going to court, right? We ought to fix this and solve the problem.”

Despite getting the fraud class action dismissed, Schuette said lawyers on both sides need to address the merits of each worker’s complaint. “Each party on any lawsuit has to sit down and turn off the phones, turn off the mics and try to get down to business,” he said.

Jennifer Lord, the Royal Oak-based attorney leading the unemployment class-action suit, said it is hard to square Schuette’s television remarks with his “hyper technical defenses designed to block the refund and compensation process.”

“Resolution of (Unemployment Insurance Agency) false fraud scandal this year is in the best interests of the citizens, the agency, the governor and other elected state officials,” Lord told Bridge in an email.

“Inexplicably, the litigation continues.”

To be fair, the state unemployment agency did settle a separate federal lawsuit in early February, agreeing to enact sweeping policy reforms in how it handles fraud cases. But that agreement did not award monetary damages beyond refunds of fines and penalties to workers falsely accused of fraud. On Aug. 11, the state said it had reversed more than 44,000 fraud cases and is refunding nearly $21 million to people wrongly accused of collecting excessive benefits.

And despite criticism that the state has acted too slowly and with not nearly enough money, Lansing has committed nearly $300 million in state funds to help address the Flint crisis, with the addition of another $48 million for in the 2017-18 state budget signed in July by GOP Gov. Rick Snyder.

Fighting, but to what end?   

Complaints about the $47 million computerized fraud-detection system poured into state unemployment agency soon after the system went active in the fall of 2013. In essence, the system replaced human calculation of unemployment fraud with (flawed) computer protocols to determine fraud.

Scores of unemployment agency clients said they only learned of the fraud finding after the state garnished their paycheck or seized their income tax returns.

A review in 2016 of more than 20,000 cases handled by computer found an error rate of 93 percent.

The state Court of Appeals ruling in July concluded that workers suing the state missed the statutory deadline for filing claims. The court agreed with the argument pushed by state lawyers that the six-month statute of limitations to file claims began when the UIA first accused workers of fraud, rather than from the time the state took action to reclaim money from workers.

Lord, their attorney, said it was absurd to expect claimants to file lawsuits before they had even been harmed.

“We will absolutely appeal this unjust result,” she said at the time of the ruling.

The battle endured by worker Suzanne Lawrence illustrates just how far the state has been willing to go to defend claims, even when the agency it’s defending, in this case UIA, conceded it had screwed up.

Lawrence was employed as a seasonal office worker at Bloomfield Hills Country Club. When she was laid off, as scheduled, in January 2013, she was given two weeks of vacation pay. Several weeks later, Lawrence was deemed eligible for unemployment benefits, receiving her first check on Feb. 20 of that year.

More than two years later, UIA accused her of collecting the unemployment at the same time she had received vacation pay, and ordered her to repay $158. That didn’t sit well with Lawrence, who argued that the two weeks of unemployment benefits covered the period after she received vacation pay.

Defending herself against UIA attorneys and, later, as many as four lawyers with the Attorney General’s Office, she fought it alone at first, representing herself before two administrative law judges and in Oakland County Circuit Court before turning to attorney Dennis Dubuc in the Court of Appeals.

“She was almost going to write a check,” Dubuc said, before she decided the principle at stake was more important than $158.

In its ruling, the state appellate court said there was “simply no evidence in the record” that Lawrence received unemployment while also earning vacation pay. The court also criticized state lawyers for insisting that the burden was on Lawrence to prove there was no overlap. It was the state’s responsibility, not the worker’s, to prove Lawrence was, in essence, double-dipping on job payments.  

“Such evidence might consist of a cancelled check, a check stub, a notice of electronic funds transfer, or a bank transfer,” the appeals court wrote. The state produced no such evidence.

Dubuc recalled that three state attorneys – or one lawyer for each $52.67 in benefits – showed up at the appeals court hearing in Lansing.

“This should never have happened,” Dubuc said. “It should have been nipped in the bud. Somebody higher up should have said, ‘What the heck is going on here?’”

Schuette spokeswoman Bitely said the office litigated the case to please its client.

“The reason we are pursuing a case for $158 is because the Unemployment Insurance Agency wants to pursue that case,” Bitely said. “As long as the client wishes to go forward, we will continue to pursue the case.”

Remarkably, the state is apparently not done in its battle for $158. On July 31, the state filed a motion asking the appellate court to reconsider its ruling.

Fighting for taxpayers

As for Flint, there’s no dispute state and local officials failed to assure the city’s water was safe when the state approved switching Flint’s drinking water in 2014 to the Flint River. There’s also no dispute residents were exposed to dangerously high lead levels as a result, with levels in some Flint children doubled by 2015.

Indeed, a 2016 report by a task force convened by GOP Gov. Rick Snyder decried a “series of government failures” and accused his administration and in state government of “failure, intransigence, unpreparedness, delay, inaction and environmental injustice” in allowing contamination of Flint’s water supply.

“Flint water customers were needlessly and tragically exposed to toxic levels of lead and other hazards through the mismanagement of their drinking water supply,” the commission report stated.

Even so, the state is battling 10 class-action lawsuits filed in federal court and more than 500 individual suits in state and federal court. The state’s outside criminal and civil defense fees tied to Flint are expected to soon hit and then exceed $21 million.

While declining to discuss the specifics of the state’s position in these suits, veteran municipal attorney Clyde Robinson ‒ who is not involved in the Flint litigation ‒ said the legal calculations considered by state lawyers are not unlike decisions municipalities make about lawsuits.

“What is the liability exposure? Is this a $500 case or a $500 million case? If it goes to trial, what is a jury likely to do?” asked Robinson, Kalamazoo’s city attorney and president of the Michigan Association of Municipal Attorneys.

“As your attorney, I can’t guarantee your results. We could walk away from this with no cause of action or we could get stuck with a quarter million dollars. That said, I’m going to do everything before that time to get the case dismissed. There is an obligation to protect the public treasury.”

Ann Arbor attorney Deborah LaBelle – among a group of lawyers pursuing the Flint class-action lawsuits – sees a state strategy designed to keep the cases as far away from trial as possible.

“It’s all about delay,” she said, noting there is abundant evidence of state negligence in Flint and of “clear harm” to residents. That harm, LaBelle said, ranges from the known, long-term neurological effects of lead poisoning to drops in home property values in Flint during the crisis.

“The goal of the attorney general seems to be delaying the opportunity to prove that before a jury.”

One lawsuit’s huge costs

Annual lawsuit payouts by Michigan’s Department of Corrections jumped because of a $100 million settlement in 2009 over sexual abuse of female prisoners. The settlement was spread out over six years. Here’s a look at lawsuit payments by year:

  • 2006-07 $584,000
  • 2007-08 $4.9 million
  • 2008-09 $442,000
  • 2009-10 $14.7 million
  • 2010-11 $10.5 million
  • 2011-12 $15.5 million
  • 2012-13 $20.2 million
  • 2013-14 $22.5 million
  • 2014-15 $26.7 million
  • 2015-16 $2.4 million

Source: Michigan Senate Fiscal Agency

LaBelle said the state’s strategy is familiar. She recalled facing similar tactics when she represented the women prisoners sexually assaulted by state prison guards, as well as in the current suit alleging prison officials failed to protect juvenile prisoners from sexual assaults by older inmates. In fact, in the juvenile prisoners case, lawyers for the state have been sanctioned in court at least three times for delay tactics.

At one point, Court of Appeals Judge Amy Ronayne Krause blasted the state’s efforts to have the juvenile prisoners’ case to the state's Court of Claims where it could not be heard by a jury. Krause labeled the effort as “some sort of horrible, frivolous attempt to manufacture jurisdiction in the Court of Claims,” adding, “I find your arguments to be really rather ... odious.”

In the Flint litigation, the state is “starting the same tactics of frivolous transfers to the Court of Claims which stops everything, then when the case is transferred back, filing a claim of appeal that stops everything until we can get the appeal dismissed or the stay lifted,” LaBelle wrote Bridge in an email.

LaBelle said the state failed to learn much from its handling of the female prisoner case, despite evidence it did not hold a winning hand.

LaBelle said her legal team initially offered to settle the state claims, involving about 250 women, for $25 million. It was rejected.

By 2007, when the case had swelled to 381 prisoners, LaBelle said she made another settlement offer of $47 million. The state declined.

That same year, a jury needed less than an hour to convict a former state prison guard of sexually assaulting a female inmate at the Huron Valley Women’s Prison.

In 2009, the state ended up paying $100 million to more than 500 prisoners and their attorneys.

LaBelle said the state could take a lesson from that outcome, and apply it to Flint.

“We know the citizens of Flint are hurt and need help,” she said. “It’s a cliché, but justice delayed is justice denied. Resolving these cases now would save an enormous amount of money.”

About The Author

Ted Roelofs

Ted Roelofs is a Bridge contributor based in Grand Rapids. He can be reached at ted.roelofs@gmail.com

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Comments

Mike S
Tue, 08/29/2017 - 8:55am

Spend a $5000 to win a $1. These are examples of why the taxpayers distrust the government to be wise stewards of our taxes. If wisdom had prevailed, the case would have been dropped before they spent the first $1000.

Bernadette
Tue, 08/29/2017 - 10:55am

The only ones getting rich in state government and now federal government are the lawyers.

***
Tue, 08/29/2017 - 9:25am

In all of these cases you can see that it is mostly the "little" people, ordinary taxpayers that are being mistreated by the govt., the state is only concerned about protecting big business and politicians with those connections.

Tom
Tue, 08/29/2017 - 9:36am

How much taxpayer $$$$ is "the client" aka unemployment agency aka state of Michigan,,,, how much $$$$$ has the State WASTED of taxpayer money in court legal fees?! Lawyers charge what ...$500 per hour, and they are wasting how much to battle for $158 ?!?! Throw them all out of office!!! Shame !!!!

John Saari
Tue, 08/29/2017 - 9:52am

The State needs overhaul. It has pompously grown beyond all limits. The State, with its large international border, should blend the State Police and Homeland Security. Drone patrol the border. Provide health, housing, food, education, public recreation and safe State lands - nothing more.

Jeremy, UMICH, MBA
Tue, 08/29/2017 - 10:28am

Enough with the hyperbole BS...
And I quote: "Government lawyers continue to contest a battery of lawsuits over the state’s role in the lead poisoning of Flint’s drinking water, a crisis that unfolded in 2014 when the impoverished city was under state control."
The author of this article is trying to imply that, once again, the water crisis in Flint is endemic of some larger, nefarious state government scheme.
In fact, the author walks right past the REASON the city was placed into state receivership, in the first place.
The city of Flint had, for decades, been run by inept and financially illiterate democrats who fiscally ran the city into the ground. Major city infrastructure projects were not only overlooked since the late 1960s, but city officials bickered how to better develop social justice coffer handouts, rather then empower local citizens to become self-reliant.
Even today, sitting on the city of Flint council you will find three (3) felons (one currently locked up in the Flint city jail). Ironically, one of the three was convicted of embezzlement charges greater than $500k.
So the author, Ted, can imply the state is some evil organization looking to oppress and subjugate the uneducated citizen, it is really he who spewing the false narrative and continuing the cycle of intellectual lunacy.

Bernadette
Tue, 08/29/2017 - 10:54am

Jeremy, UMICH, MBA,

Wow, this article really upset you. Maybe some soul searching is in order. If you have no knowledge of structural racism you must have been sleeping during class, and you definitely have not been paying attention over the past 4 years.

Paul DuBois
Tue, 08/29/2017 - 11:07am

Your claim of Flint officials mishandling their money is baseless hyperbole. As Flint went into state receivership I went back and reviewed several decades of budgets to check this claim out. In fact Flint officials had been cutting spending and trying to keep the budget balanced for decades. The problems were based in the withdrawal of GM from the city and the State of Michigan never living up to the promises of revenue sharing it made to get a law passed limiting the amount of taxes a city can collect. The final straw came in 2011 when the Flint city submitted a balanced budget and the state informed them that it did not include severe cuts in revenue sharing the state planned. This resulted in the receivership. As a consequence of the receivership many good candidates for elected offices in Flint dropped out of the running because they would have no power and receive no pay. This resulted in the people you identify as being on the council.

The water issue resulted from a decision made by the state DEQ to not add anti corrosives to the water when Flint began treating it own water. The people in charge of the Flint water plant disagreed with this decision and said the plant was not ready, they were ordered by state appointed emergency manager to do it anyway. The state DEQ and DHHS then covered up the testing results showing the damage their poor decisions had made. They committed criminal acts and are currently under indictment. They felt it was more important to cover up their failures than to have any concern for the health of the people in Flint.

You need to stop the partisan silliness and understand the facts of the case.

Ann Farnell
Wed, 08/30/2017 - 2:28am

Paul, I followed the Flint crisis carefully. I had piles of notes sorting my way through the claims, counterclaims, lies, etc. Your summary is so concise. So on target. Thank you for your excellent analysis.

Bernadette
Fri, 09/01/2017 - 12:52pm

Thank you Paul for your thoughtful comment. I too following the Flint tragedy and was appalled by the lack of reaction by the State. I spent many hours writing to the governor, attorney general and my reps.

Michigan is in the state of decline it is due to the amoral behavior of republican politicians, with the same old rhetoric of "cut taxes" for business to allow the trickle down to the little guy. It is much easier to stand by the party line than to think about or care about the future of this once great state.

Paul Jordan
Tue, 08/29/2017 - 11:46am

I live in Flint, as do my daughters and grandsons. I have some experience with the city and its challenges.
Jeremy is speaking with Mackinac Center sound bites, not facts. The city of Flint lost most of its industrial tax base with the closing of three of its four GM complexes, and the simultaneous elimination of income tax-paying jobs through automation. We lost half our population, with attendant loss of demand for property--and loss of its taxable value. For example, in a single year in the 2000s Flint lost 25% of its property value.
State law has placed severe restrictions on the extent to which Flint's tax base can recover. We tax our income at the maximum allowed. Due to constitutional restrictions, the taxable value of property can only rise at the rate of inflation--which means that the buying power of property tax monies can never recover to previous levels.
It is almost criminally ignorant for Jeremy to assert that, given those facts, Flint's governments should somehow have been able to spin straw into gold in order to avoid fiscal distress.

John
Tue, 08/29/2017 - 12:29pm

Let's add to this the 3% teachers are owed. AG said they need to be paid and Snyder is paying outside counsel hundreds of thousands of dollar to continue this nonsense. Police and fire were reimbursed long ago.

Matt
Tue, 08/29/2017 - 2:21pm

Only one problem with suing the state or any officials on any of these issues ... It's not the State or its officials (whose negligence caused the issue) that pay the penalty. It's the Tax payers who had little direct culpability in the matter that get stuck with the "damages"! Let's remove the indemnification these officials receive and let all officials become personally liable and we'll have a government that gets involved in a lot fewer matters than they jump into now. A good thing!

Rich
Wed, 08/30/2017 - 8:39am

Best comment of all. Let the State pay for any actual wrongful monetary loss incurred by plaintiffs, but make the government officials personally pay for any penalties, interest, damages, and lawyer fees awarded in the class action lawsuit.

Kevin Grand
Wed, 08/30/2017 - 5:28am

"The first duty of lawyers from the Attorney General’s Office is to protect the interests of their clients – state employees – and more broadly, the taxpayers, said Cox, who served two terms as attorney general, through 2010. "

Since the role of government is supposedly to serve the taxpayers, Mr. Cox's response is non sequitur.

But then again, Lansing has a long history of screwing over the people they purportedly serve.

The "advanced payment" of the Michigan Summer Property Taxes back in the early 2000's.

The Michigan Income Tax rollback that NEVER materialized.

The Michigan gas tax and vehicle registration hike which the Michigan Legislature enacted right after Proposal 1 was soundly defeated by the largest margin in Michigan Election History.

It now appears that the roles have been reversed and Michigan Taxpayers are expected to serve government employees, rather than the other way around as it should be.

David Waymire
Wed, 08/30/2017 - 3:41pm

The income tax rollback that never materialized? Please take the time to visit https://crcmich.org/PUBLICAT/2010s/2017/Tax_Outline_2017.pdf and look at page 5. You will see that in 1980, our income tax rate was 4.6 percent. Then up to 5.6 percent to deal with the recession...then down to 4.6. Then up to 6.35 under Blanchard, so we could continue to fund schools and higher ed can cities...then down to 5.35 and 4.6 by 85. It is today at 4.25 percent...and we have higher college tuition, crumbling roads, fewer cops in cities and an overall lower quality of life than in 1980, when it was 4.6.

Kevin Grand
Thu, 08/31/2017 - 6:06am

Mr. Waymire, would you care to explain how Michigan functioned before we had an income tax?

Most people tend to "overlook" the fact that Michigan ran quite well for nearly a century and a half, until a certain "brainwashed" republican governor pushed through the income tax back in '67, which by the way was only supposed to be 2.9%, until the Michigan legislature got hooked like a junkie on spending other people's money and then Katie bar the door.

Before that time Michigan built roads that lasted, provided funding to colleges and the quality of life was arguably better back then.

And if you actually need a reminder of EXACTLY what I meant by the income tax rollback that never materialized...here it is.

2007: Then Michigan state senator Mike Bishop essentially sold his soul to the devil (Granholm) and signed off on a hike in the Michigan Income tax from 3.9% to 4.35% with the "promise" that it would be gradually reduced to where it was at the time of the Faustian bargain.

When the time came to honor that "promise" to the Michigan Taxpayer (which was written into the Public Act back in '07), Gov. Snyder reneged on that promise and kept the rate at4.25%.

Now, before you opine that there still isn't enough money, state budgets under Snyder have gone up just about every year Gov. Snyder has been in office (from $48.2 billion in '12 to $56.5 billion this year).

And before you opine that some of the money in the state budget is federal match...you're right. However, according to SFA numbers, state match has gone from $25.2 billion in '10 to $32.1 billion in '18. So Lansing DOES NOT have a revenue problem.

And before you opine that much of that spending is restricted...you'll be right. But those "restrictions" are mostly statutory. Meaning that a law passed by a previous legislature can very easily be undone by a later one (just like Snyder's income tax hike I've mentioned above).

Just like I alluded to in an earlier thread, the problem here isn't a "lack" of money going into Lansing's coffers, it's Lansing's inability to prioritize it's spending.

That thing Michigan households have been doing with their own personal and family budgets for years now.

Willie
Sun, 09/03/2017 - 4:54pm

Great Analogy

Ben sweatland
Wed, 08/30/2017 - 7:56pm

How old are the pipes in flint? 20 30 40 years old?
Please tell us the people how much we owe them so u can write the first check please

Viki
Wed, 08/30/2017 - 9:14pm

The article head says sponsored. I want to know by who.

Darrell
Fri, 09/01/2017 - 10:44am

The proverbial definition of a crying shame.
I suspect empty seats will remain empty and ones that are full will soon be empty.

Leslie Watson
Sun, 09/03/2017 - 11:06am

Maybe we need more judges and attorney's like this one in Caught in Providence: The Breakfast Verdict found in YouTube.

sam
Mon, 09/04/2017 - 5:14pm

you forgot to mention the fine for reporting unemployed pay from the courts is $ 9000 ....one person killed them self, knowing that amount could never be payed of by a plane(minimum worker..)