A Right To Be Heard

Unemployment claim form on an office table.

An automated computer system, known as MiDAS, used by the Michigan Unemployment Agency from 2013 to 2015 may have initially been deemed a success, with record numbers of applicants being flagged for fraud. For instance, in 2014, MiDAS flagged 27,000 fraud cases, nearly double the cases from 2012. However, seven years later, MiDas should be deemed a failure since results show that more than 40,000 people were falsely accused of fraud and victimized as a result.

The victims of this system failure not only weren’t given an explanation to what they had done wrong, they weren’t even given a chance to defend their actions before their paychecks were garnished.  Why aren’t agencies this aggressive with real fraudulent claims? Because real time fraudsters disappear and can’t be punished till found. Those who are falsely accused have a life and need to fight.

Even though refunds were eventually issued to those affected, workers sued alleging that the DES agency violated their due process — a right to be heard — resulting in not only financial hardship but emotional distress as well. Some victims had to hire lawyers. Others filed for bankruptcy, lost wages, suffered poor credit ratings or had trouble finding a job and housing.

No surprise, it took a long time for the state to acknowledge any problem! For seven years the government of Michigan fought the lawsuit brought on by the victims. Yet the Michigan Supreme Court ruled in favor of the plaintiffs twice. On October 20, 2022, Michigan lawmakers agreed to set aside $20 million to settle this lawsuit.

With pandemic-related unemployment fraud now estimated to reach at least $8.5 billion, Michigan officials and legislators continue to spar over whether the state agency in charge of payments is fixing longstanding mismanagement. It seems doubtful since the Michigan unemployment agency is currently facing two other lawsuits alleging due process violations.

A shout out to the Michigan Supreme Court for doing right by the victims.

Today’s Fraud of the Day is based on an article “Michigan to pay $20M to workers falsely accused of unemployment fraud” published by MLive on October 20, 2022

Michigan will pay $20 million to people wrongfully accused of unemployment fraud. The settlement announced by Michigan Attorney General Dana Nessel and law firm Pitt, McGehee, Palmer, Bonanni & Rivers on Thursday resolves a class-action lawsuit filed against the Michigan Unemployment Insurance Agency in 2015.

“This settlement honors my commitment to ensure those falsely accused by their government receive fair compensation for their suffering,” Nessel said in a statement. “All legal issues relative to the case have been decided and it is time to put this to rest.”

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.