Monday, October 5, 2015

Update: UIA lawsuit shows how the state criminalizes the unemployed

Posted By on Mon, Oct 5, 2015 at 12:06 PM

shutterstock_94201681_1_.jpg

Updated 12:06 p.m.. Oct. 5: 

Neil A. Young, a former Michigan Compensation Appellate Commissioner, is joining the Pitt McGehee Palmer & Rivers legal team in its civil suit against the Michigan Unemployment Insurance Agency. The suit, which charges the agency with mislabeling numerous unemployment claims as fraudulent, deals with a subject matter right in Young's wheelhouse. Serving on the commission for over 20-years, Young was responsible for reviewing unemployment benefit appeals — the very appeals that the suit is arguing were often erroneously flagged by computers. 

“As a commissioner, I fought the type of UIA abuse detailed in this lawsuit on a case- by-case basis. Now that I’m in a better position to help, I look forward to working with the lawyers from Pitt McGehee Palmer & Rivers to end the agency’s unconstitutional practices and illegal tax refund seizures once and for all,” Young said in a statement about his decision to join the case. 

As a commissioner he was vocal in his objection to UIA computers being the sole decision-makers in all parts of an unemployment claim — an issue that others have caught onto as well. Less than a month after the civil suit was filed, the US Department of Labor issued a statement to all unemployment agencies across the nation, reminding them that automated machines alone may not make determinations of overpayment or fraud — there must be some human oversight.

The Oct 1st labor memo, which reiterates many of the issues the suit is aiming to fight, and Young's decision to join the case are just two of the three small wins the legal team taking this on have experienced. The third is the fact that in September, Michigan's UIA announced that it had reversed its original determination about lead plaintiff Grant Bauserman. While the UIA has not made any moves to reimburse Bauserman for the tax refunds they held as penalty for perceived fraud, the legal team representing him is celebrating this decision as a step in a positive direction. 

“Having Neal bring his years of specific experience to our cause will be a tremendous benefit to our position and our clients. Plus, the Department of Labor memo directed all the states, including Michigan, to discontinue the very same illegal practices we outlined in our lawsuit. Along with the rather sudden reversal of Mr. Bauserman’s determination after we filed suit, this is more validation that our case is very strong,” Kevin Carlson, an attorney with Pitt McGehee Palmer & Rivers said in a statement. 

Pitt McGehee Palmer & Rivers will be hosting an informal gathering for claimants interested in joining the lawsuit on  Tuesday Oct. 6 at the Baronette Renaissance Hotel, 27790 Novi Road, Novi, Mich., 48377

Originally posted 1:53 p.m., Sept. 18:

In September 2013 Grant Bauserman was laid off from the Eaton Corporation, a power management company in Jackson, Michigan. Finding himself suddenly out of a job, the former plant manager did what thousands do every year: He applied for unemployment benefits. What Bauserman couldn’t have anticipated when he sent in his claim was just how this supposed safety net — funds to help him float during a few months of uncertainty — would turn into an emotional and monetary shipwreck. Within two years his application for unemployment benefits would lead to the seizure of his state and federal income tax refunds. For Bauserman — a plaintiff in the class action lawsuit filed last week against Michigan’s Unemployment Insurance Agency for allegedly mislabeling numerous unemployment claims as fraudulent — applying for benefits had an inverse effect: It weighted him down, forcing him to flounder in a complex and punitive system. 

He is not alone. The suit, filed in the Michigan Court of Claims by attorney Jennifer Lord of Royal Oak-based firm Pitt McGehee Palmer & Rivers, argues that the erroneous flagging of unemployment claims has created costly headaches for numerous individuals who have also had their federal and state tax refunds illegally seized as a result of the blunder. 

“The program is essentially victimizing people in our society who have no voice, who have no access to resources to be able to go out and try to fight this,” explains Lord, who points out that not all are as lucky as Bauserman, who was able to avoid financial ruin at the hands of the UIA because he was fortunate enough to find a new job fairly quickly. 

At the center of the case is MiDAS, the computer software program which handles all claims and appeal. Implemented by the UIA in fall 2013 under a bill green lighted three-years earlier by Gov. Rick Snyder, MiDAS is viewed by the state as a necessity to “modernize” the system and minimize waste. The program, however, has largely been criticized for causing inconveniences and financial burdens for those it incorrectly flags for fraud.

“There are no checks and balances built in,” says Lord. “Machines and computers can do a really good job of detecting discrepancies, but they don’t do a good job of trying to understand what those discrepancies really mean.”

Under the oversight of a computer, a person can be sucked into a time consuming and pricey spiral if there are any discrepancies. Say an employee and employer put down ever so slightly different versions of how a termination came to be—that can snag you. “Even if everyone agrees that the termination happened, any variations in story would mean that case would be flagged,” she explains.

While a real person may recognize that narrative discrepancies are a normal part of everyday life and not a tell-sign of deceit, MiDAS is not so perceptive. The same way automated essay graders have been criticized in the education arena for missing the nuances of language and therefore being ineffective and making unfair choices for grading high-stakes exams—MiDAS lacks the emotional intelligence to discern between fraud and just the complexity of how individuals relay different events.

Compounding the issues with MiDAS is the fact that program is there from start to finish. Once a person has been flagged, they must appeal their case to the computer software as well. Given the flaws of MiDAS in identifying fraud, it’s unsurprising that this next step is just as problematic.

“It systematically goes into collection mode,” explains Lord, who details how folks charged with fraud have a difficult time appealing their cases.

Want to see how nuts it is in practical terms? Here's Bauserman's tale:

From October 2013 through the beginning of March 2014 Bauserman received unemployment benefits from the state. After twenty weeks—the maximum amount of time one can receive unemployment benefits in Michigan—Bauserman moved along. Or so he thought. A few months later, in October 2014, his online account with Michigan’s Unemployment Insurance Agency received a message saying he had been flagged for possible fraud. The bureau’s computer software noticed that in the end of March Bauserman had received a check from his former bosses—to the machines this check read as unaccounted income. In reality the check was merely a pro-rated 2013 bonus that Bauserman had earned while employed the year early—the company he worked for, like many, doled out their bonuses the following year. Handling this mix-up, not so simple. Since the agency only contacted Bauserman through his online account—an account he was no longer checking regularly since he was no longer receiving benefits—Bauserman did not see the note until November. He sent two letters to UIA to explain the confusion—no response. In February 2015 the UIA sent him a monthly statement saying he owed the state almost $20,000 — $3,982 for the alleged overpayment, and more than $15,000 as a penalty for the supposed fraud. According to the letter the state could intercept his state and federal income tax refunds, garnish wages or take him to court to collect the owed funds. Despite sending letters to explain the owed bonus, the saga only got worse. UIA made good on its promise: Bauserman’s state and federal tax refunds were seized. Bananas, right?

This virtual vortex means individuals flagged for fraud often end up having their tax returns seized or new wages garnished by the state, as they are expected to not only pay back what they received in unemployment benefits, but are also burdened with an additional penalty that is quadruple what they got from the state. In Michigan the maximum amount an individual can receive in unemployment benefits is just over $7,240, so if the person receiving the max was flagged for fraud that means they would owe the state over $28,000. "It’s sending people who are marginally just getting along into the class of being poor and having no real chance to move forward," says Lord who believes the lack of human oversight means the fundamental of promise of due process is missing.

This is not the first time MiDAS has garnered public attention—or lawsuits. In Criminalizing the Unemployed the Metro Times’s July cover story, former staff writer Ryan Felton details the shortcomings of the software, as well as a federal lawsuit also challenging UIA’s “robo-adjudication" system.

"The system has resulted in countless unemployment insurance claimants being accused of fraud even though they did nothing wrong," reads the federal suit.

While the state has moved to dismiss the robo-adjudication case on a variety of grounds, David Blanchard, the Ann Arbor attorney who filed the suit, says briefs have been submitted and a hearing is scheduled for next month.

The efficacy of the program is at the heart of both cases, though. Since last October MiDAS has collected over $63 million in overpayments—a stark contrast to say 2010 when it only collected $27.3 million. For the state this signals the program is working to eliminate waste, for those behind these lawsuits, however, these figures highlight illegally seized funds.


Tags: , , , ,

Best Things to Do In Detroit

Newsletters

Never miss a beat

Sign Up Now

Subscribe now to get the latest news delivered right to your inbox.