WXMI — Testifying before the Michigan Senate Oversight Committee on Thursday, the state’s current Unemployment Insurance Agency director could not tell lawmakers who was in charge of security during the roughly three-month period when the agency paid out roughly $9 billion in fraudulent claims.
Between March 1, 2020, and September 30, 2020, the accounting firm Deloitte, in an independent report, said the UIA paid out an estimated $8.4 billion - $8.51 billion to fraudsters and another $3.9 billion in ineligible payments. The almost $9 billion figure represents almost 22% of all the money paid out by the state agency during the entire pandemic.
UIA officials told the committee that Tim Kolar, whose LinkedIn profile lists him as a current state office administrator “rooting out fraud, waste, abuse, and inefficiencies in government-administered social programs,” was in the position that would’ve overseen fraud for a time, but was moved out, then moved back in at some point.
“I think the Deloitte report indicates that he was moved out. It does not indicate there was a replacement during that time period,” said Todd Cook, director of legislative affairs for the UIA. “There was a time that Mr. Kolar’s responsibilities were changed and then he was returned back to that position.”
“So you have a guy in charge of fraud, and you say alright, you’re no longer in charge of fraud and you didn’t have anyone replace him?” asked Representative Steve Johnson, (R) – District 72. “Who was in charge of fraud when he left?” he pressed.
“I understand the frustration Senator…” said Cook.
“I don’t think you do,” Rep. Johnson cut him off.
Dale also told the committee members that some of the fraudsters who received payments were contracted workers within the agency.
“It is something we are very concerned and upset about,” said Dale. “We have gone ahead and drafted a new policy regarding criminal background checks and fingerprinting that we are working on.”
Dale said those employees identified as fraudsters have been fired and did not give any insight into how workers inside the agency were able to make acquire the money.
Dale did note that during the time period where the billions were paid out incorrectly, the agency managed to stop $43.7 billion in fraudulent claims – 10,000 cases over the holiday period alone.
“This isn’t a point of bragging,” she said. “What it is a point though of saying is there is not a single state that has been as transparent with this data or this information as we are. There is no other jurisdiction that is putting this information out there.”
When asked who will have to pay out the fraudulent claims, Dale was also vague on answers when lawmakers suggested it would likely have to be the state.
“We are speaking with our partners at the Department of Labor regarding those issues and continuing those conversations. We know that those are concerns,” she said.
Late last month, Governor Gretchen Whitmer signed an executive order creating a UIA fraud response team to “efficiently identify, investigate, and prosecute individuals who steal UI benefits.”
“She wants to make sure those claimants that are eligible for benefits are able to get those and that those bad actors, those fraudsters, are not impeding that activity,” said Dale.
The UIA also announced a new partnership with the federal Department of Labor, making Michigan one of the first 18 states to participate in their Tiger Team collaboration. The partnership will provide the state UIA federal help in overhauling their policies and identifying fraud, recouping lost funds, and dealing with claim backups.