Committee also reviews unemployment fraud report

State Rep. John Reilly and the House Oversight Committee today approved a plan to reform the Unemployment Insurance Agency (UIA) to better serve unemployed workers who apply for benefits.

The plan was introduced after Reilly and fellow legislators heard from numerous constituents about difficult, delayed experiences trying to obtain unemployment benefits when they lost work during the COVID-19 pandemic.

“The unemployment agency has been totally inadequate to the tasks at hand during the pandemic,” said Reilly, of Oakland Township. “Our plan addresses the most common complaints we have heard from people who have had to deal with the agency — workers who lost their jobs, applied for benefits, and then were stuck waiting for the agency to respond. An advocate to help oversee the agency, clear timelines for processing claims and collecting repayment, and transparency requirements will all help clean up our unemployment agency.”

The package, consisting of House Bills 5549-5554, seeks to improve both customer service and transparency at the UIA. To help applicants get a response, HB 5553 would establish a clear, prompt timeline for the agency to make a determination on each claim. A timeline in HB 5551 would also ensure the UIA does not delay seeking repayment from honest claimants who received benefits due to a mistake by the agency. When claims are appealed, HB 5554 would require the agency to provide all necessary information to the administrative law judge reviewing the appeal.

HB 5552 would create an independent unemployment insurance advocate to provide oversight and investigate complaints about the agency, including complaints from people who have applied for benefits. Two reporting requirements will strengthen transparency about critical aspects of the agency’s work. HB 5549 would require a regular report to the unemployment insurance advocate about administrative appeals and federal monitoring reviews. HB 5550 would require monthly online posting of the amount in the unemployment trust fund, which is supported by taxes on Michigan employers.

The panel approved the bills as part of a joint hearing with the Senate Oversight Committee focusing on the UIA. The committees heard testimony from agency Director Julia Dale after an independent review estimated that the agency paid about $8.5 billion in potential fraud between March 1, 2020, and Sept. 30, 2021.

The estimated fraud includes $2.8 billion for claims involving likely imposter fraud, or the use of another person’s name, and $5.7 billion for claims involving likely intentional misrepresentation, such as withholding information or supplying false documentation to misrepresent the claimant’s qualification for benefits.

Legislators questioned Dale about the report and the factors that contributed to the significant amount of fraud the agency likely paid. Reilly was unsatisfied with the limited information provided at the hearing. Near the beginning of the pandemic, the agency deactivated key fraud detection tools and reassigned personnel charged with investigating fraud, and members of the committee asked for details about the decision. Dale did not specify who made the final decision.

“Director Dale’s testimony on unemployment fraud was astounding,” Reilly said. “I am deeply concerned at her unwillingness or inability to answer many key questions about changes within the agency that contributed to the exorbitant amount of fraud. I hope the director and her staff will review the facts and provide us with forthright information to clear up the many unanswered questions.”