State audit shows unemployment agency’s computer failed

Posted at 5:55 PM, Feb 05, 2016
and last updated 2016-02-05 17:56:48-05

LANSING, Mich. -- The Michigan Auditor General released a report today on the Michigan Unemployment Insurance Agency's audit$47 million computer system (MiDAS).

The 40-page report dives into several findings, including the misrepresentation issues the FOX 17 Problem Solvers have been reporting on for the past several months.

MiDAS launched in late 2013. In a state-authored report, the Department of Technology, Management and Budget said the automated system is designed to operate efficiently and without human intervention.

In the 40-page audit, the state Auditor General said the agency failed with the computer system in several areas. Basically, MiDAS approved unemployment benefits, paid them out and then denied those very same approvals. As a result, it created trumped up fraud and misrepresentation charges and demanded people pay the money back plus penalties -- up to four times the original amount.

Some people were slapped with tens of thousands of dollars in fines. The audit found that the unemployment agency had a screen-shot-2017-01-29-at-7-12-38-pm. When it came to the misrepresentation issues, multiple judges affirmed the state 8 percent of the time. The other 92 percent of cases were presumed innocent and were either reversed, dismissed, modified, or remanded back to the UIA.

"This is what we were trying to tell the agency the whole time. That fragel2there's no merit to the findings of their adjudication of misrepresentation. Very rarely," unemployment advocate Deb Fragel said.

I discussed the findings with Fragel and had also sat down with her last year. She helps people navigate the system and has long voiced her concerns about errors in state government.

"It's alarming. I think it's alarming because it's a waste of money. It's a waste of government funds," Fragel said.

"That means that people showed up to the hearing. The ALJ was scheduled to have that hearing. Paperwork went out. Documents were given. People took time off work. I would travel, advocates and other attorneys would travel to these hearings because misrepresentation hearings are supposed to be in person, and then you get there, and it's dismissed? It's just a big waste of time."

A graph within the audit shows an increase in the backlog of appeals cases waiting to be heard by a judge. It starts in June 2013screen-shot-2017-01-29-at-6-53-51-pm (before MiDAS launched) and goes through the summer of 2015. The backlog peaked at more than 26,000 cases in April 2015. According to the audit, judges sided with the UIA 21 percent of the time for non-fraud cases.

The unemployment agency declined an interview for today but provided the following statement:

"In general, the UIA agrees with the findings from the Auditor General’s performance audit on the Michigan Integrated Data Automated System (MiDAS) and have already implemented or started implementation on most of the recommendations. The audit noted a number of items to improve the MiDAS system as it relates to system security and access controls.

In fact, the agency has already implemented a systematic training process for staff. More importantly, the MiDAS servers have not been subject to a breach or loss of data since implementation. The UIA is committed to ensuring a system that is efficient and effective while maintaining proper system security and access controls.

In response to the Auditor General’s recommendation that UIA fully implement processing controls within MiDAS to help ensure appeals process efficiency: A series of changes have been implemented in 2015 to ensure appeals process efficiency between the UIA’s MiDAS system and the Michigan Administrative Hearing System (MAHS) myCaseLoad system. UIA acknowledges that improvements, where identified, should continue to be implemented."

Meantime, two lawsuits are pending against the state. The state Attorney General's office has motioned to dismiss both. The judges in each case have yet to rule.

Proposed legislation designed to regulate how the UIA uses MiDAS and notifies citizens is in the state House, and it's awaiting a committee hearing.

To view the report click here.