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Audit: Michigan unemployment agency overpaid nearly $4 billion in benefits

UIA, Unemployment Insurance Agency
Posted at 9:07 PM, Nov 18, 2021

LANSING, Mich. — A newly released report from Michigan’s auditor general says the state’s Unemployment Insurance Agency was “not effective” in its rollout of the federal Pandemic Unemployment Assistance and in turn overpaid at least $3.9 billion in claims to ineligible people.

The report highlights “actions and inactions” by the agency’s senior leadership that led to an uncontrolled system, delays for people who were eligible and nearly 350,000 ineligible claimants getting paid.

We knew there were problems at the unemployment insurance agency, but it's much worse than even we thought it was,” says former House Oversight Chair State Rep. Matt Hall (R–Marshall).

According to the report, the agency put eligibility criteria that were not authorized by the U.S. Department of Labor and did not seek clarification from them on who qualified.

READ MORE: UIA offering virtual appointments in effort to increase accessibility

In April of 2020, UIA executives at the time acknowledged that they had a choice between “speed and overpayment risk,” when trying to process the claims.

“You looked at this audit, and it talks about how the unemployment director presented to the governor's office a slideshow which explained, 'Hey, if we just pay out to all these people that aren't eligible, the federal government probably won't request us to get it back,'” Hall added.

This all came to a head this summer when nearly 700,000 Michiganders received letters from the UIA saying they needed to recertify their PUA eligibility and potentially pay back benefits they received.

It was determined roughly 350,000 of them were never eligible for the assistance, but according to the audit the UIA won’t likely recoup the overpayments because they are at fault.

Because of that and delays in getting eligible out-of-work Michiganders assistance, state GOP lawmakers opened an investigation into the department and requested several audits.

“We heard many stories from people who couldn't get their benefits that were eligible. But here they are paying out fraudulent claims, paying out claims to people who are not eligible, and while they're not paying out to people who were eligible. And so I think what we see here is this warrants these other audits, and continuing to peel back the curtain and look at how this Whitmer administration unemployment agency is functioning, because it needs to succeed. It needs to work for the people of Michigan, “ Hall said.

The agency has seen three directors since March; the third, Julia Dale, took the helm late last month.

READ MORE: Gov. Whitmer names new unemployment director

She responded to the report in a statement saying, “The Unemployment Insurance Agency was tested by a once-in-a-lifetime crisis, and while our staff is justifiably proud of its accomplishments, we also must use this as an opportunity to evaluate and improve. That’s why I appreciate the office of auditor general’s perspective on improving the unemployment insurance agency’s processes and internal controls.”

"UIA initiated and implemented changes and the agency will continue to identify ways it can meet the OAG’s recommendations.

The audit looked back at our operations at a time when, as a consequence of the pandemic, the agency was standing up new and complicated federal programs while processing hundreds of thousands of claims every week, shifting nearly our entire staff to remote operations, and simultaneously responding to unprecedented levels of sophisticated, criminal efforts to defraud the agency.

The work the UIA did this time supported millions of Michiganders by providing a temporary lifeline to pay for food, housing, prescriptions and other critical needs. So far, more than $39 billion has been paid out to nearly 3.5 million Michigan residents. Every member of the UIA team should be proud of the work that was done on behalf of our fellow Michiganders. But we should also be sure to learn from this experience so that we can do a better job of stopping fraud and paying legitimate claims in a timely fashion.

UIA is implementing program controls and processes based on the OAG’s audit and will continue to refine those processes as the agency moves forward with its priorities of establishing a level of care, expertise and training to ensure unmatched excellence in customer service; strengthening and maintaining stakeholder relationships; and taking important steps to seek, develop and retain top talent."

   UIA Audit by WXMI on Scribd

This audit is the first of several looking into the agency expected to come out in the next few months.

READ MORE: UIA begins search process to upgrade its operating system

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