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Unemployment fraud investigation: Professors ask feds to intervene

Posted at 7:50 PM, Jun 29, 2015
and last updated 2015-06-29 19:50:01-04

ANN ARBOR, Mich. -- Professor Steve Gray is very familiar with the complaints hitting the state`s unemployment agency. While Gray and professor Luke Schaefer said their views don't reflect those of the University of Michigan, they felt strongly enough about this to embark on a mission to change the system.

Gray runs the Michigan Unemployment Insurance Project. It's a free clinic and is part of the University of Michigan Law School in Ann Arbor. He and first year law students are helping people who are having problems with the agency.

"We realized that most of these people were completely innocent," Gray said.  "Over the last few years, especially starting in 2013, there was a very large uptick in the number of people that were being accused of fraud by the agency."

Gray agrees with critics who say a new state computer system makes crucial decisions with little to no human intervention and automatically accuses people of trying to play the system. It lacks due process, even though there may be simple filing errors, mistakes made by the employer or nothing wrong at all. Critics call it "robo-adjudication."

Social work professor Luke Schaefer questioned, "Could we see some sort of behavior change in the state that was commensurate with what we were seeing in news reports?"

So he started digging into public data.

"What I found astounded even me. 27,000 fraud cases were established in 2014 against Michigan residents. That's 5 times the typical average in a typical year and twice the previous historic high," he explained.

In late May, the professors sent a report of their findings to the United States Department of Labor, which oversees Michigan's Unemployment Insurance Agency.

"And it's just raising concern and asking them to have a closer look," Schaefer said.

It turns out, the FOX 17 Problem Solvers also caught the Department of Labor's attention. We filed a public records request in May and learned a labor department specialist emailed a link of one our articles to the unemployment agency's director.

The story had also been shared on the Department of Labor's news feed.

In an email, the Department of Labor said the FOX 17 article "does raise the general question of how are the misrepresentation issues being raised and processed and is it being done correctly?"

Also regarding FOX 17's news report, the federal employee said "the additional visibility is not helpful." Still, the unemployment agency insisted the computer system was working properly.

Gray and Schaefer have outlined what they think needs to change and feel our coverage has helped move the needle in Lansing.

"I think you bringing to light that there are lots of innocent people on the west side of the state that are being impacted by this is really important. It makes it a statewide issue. It makes it harder for legislators all over the state to ignore. And so, it's really important that you're doing this," Gray explained.

The FOX 17 Problem Solvers also reached out to the Department of Labor. Spokesperson Scott Allen emailed the following:

“The US Department of Labor is aware of the complaints and has engaged with (the state of) Michigan to review the situation, which will include an on-site visit, but it’s too early to discuss the outcomes of this review process.”

We've heard the state's side of the story. It contends the UIA system "works well." It's complex but isn't broken. Meantime, a federal lawsuit against the state is pending.

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