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Problem Solvers: New law halts robo-fraud

Posted at 11:06 PM, Dec 18, 2016
and last updated 2016-12-18 23:11:54-05

Lansing, Mich. — State lawmakers in the House and Senate have unanimously approved House Bill 4982, and it's snyderheaded to Governor Rick Snyder's desk this week. The legislation requires the Unemployment Insurance Agency stop depending solely on a computer to determine if a claim is fraudulent. It also seeks to improve the notification process and shorten the time the state can retroactively flag for fraud.


State representative Roger Victory, a Republican from Hudsonville, introduced the legislation in October 2015, following a series of reports on the plagued system by the FOX 17 Problem Solvers.

Travis Kirby, 28, knows unemployment insurance woes all too well. However, the Hastings man's load just got a lot lighter. The husband and father of two carried a heavy burden for four years, and it started in the unemployment line.

"We came close to loosing our house quite a few times," Amy Kirby, Travis'family wife said.

Months after getting approved for benefits, the UIA accused him of unemployment fraud and demanded he repay $3,400 he collected plus penalties and interest. Kirby said the state garnished his wages and intercepted his tax refunds over the past several years, mounting to roughly $18,000.

"They were taking about $500 a month," Kirby said.

Kirby's file transferred from the old system to the new system known as MiDAS — a computer system the state has now admitted to wrongly marking claims as fraudulent. His name was among many that FOX 17 sent to the state for review early on in this investigation.

backlogHis story mirrors the many men and women profiled by the FOX 17 Problem Solvers with what would turn out to be false fraud accusations. Like them, he couldn’t get a hearing in front of a judge because of a backlogged system.

"The state's so hard to get a hold of," Kirby said.

In June 2015, the Problem Solvers secured an interview with Stephanie Comai comai1who directed the Talent Investment Agency (TIA) at the time. The TIA oversees the UIA and had a different stance on the MiDAS computer system then.

"Is there a faulty computer system?" the Problem Solvers asked.

midascomputerComai responded, "Our computer system is actually very robust. It's one of the first successful computer launches in the nation for unemployment insurance. Much more effective than our old system."

State officials stressed to the Problem Solvers that fraud in the UIA system is a reality. In 2011,  the State Auditor General mandated the agency crack down on fraud. The audit showed an estimated $38.5 million in unemployment claims had been lost to fraudsters during the recession.

Over the course of this Problem Solvers investigation, a number of advocates and attorneys have spoken out for their clients. Many said the pendulum for finding fraud swung too far the other way.

comaiIn August 2015, Comai reached out to the FOX 17 Problem Solvers for another interview.

"So we started actually this week with an enhancement to how we're handling fraud cases," Comai said.

In fall 2015, the UIA reviewed 4,337 fraud cases and overturned 85% of them. The2015fraud agency blamed MiDAS and said it planned to stop solely relying on MiDAS to find fraud. A staffer would start verifying. The Problem Solvers asked Comai what prompted the policy changes.

"Well, I want to thank you for helping us understand what customers were experiencing," Comai credited the Problem Solvers.

victorylegislationState representative  Roger Victory then introduced legislation to codify the agency's policy of having a staffer verify a computer's fraud finding.

A slew of public hearings took place this year in front of the House Oversight and Ethics committee. Affected citizens took the opportunity to sound off on the unemployment system. Two state audits also backed up their complaints.

At a hearing in April, UIA director Sharon Moffett-Massey told lawmakers, "We continue to make improvements to the system."

She added, "With any new computer system there are masseychanges. You find things that were programmed and at one point made sense, and you go back and perfect it, continue to perfect it."

After passing both chambers unanimously, the legislation is headed to Governor Snyder's desk to become law this week.

fundAccording to the Senate Fiscal Agency, the contingent fund (which stores those garnished wages and tax refunds)  increased from $3 million to more than $150 million from 2011 to 2016.

The state legislature previously took notice of the increase and voted to redirect the money to fund skilled trades training programs.

However, Kirby will finally be getting what he paid into that fund. On November 29th of 2016, he finally had a hearing.

Administrative law judge Steven Brown ruled in his favor and overturned the agency's fraud ruling.

"My parents were very supportive," Amy Kirby said.amy

She added, "There was other situations that were worse and that was what's really the heartache. So we're very blessed and fortunate to get to the point in having a hearing."

"We'd prayed and prayed and prayed, and thank you to Darren that we finally did," she concluded.

penaltyKirby said the state now owes him  about $18,000. The Problem Solvers have contacted the UIA to ensure Kirby gets his refund.

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