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Michigan unemployment agency will stop collecting from people it claims were overpaid benefits

unemployement insurance form on a clipboard
Vitalii Vodolazskyi
Adobe Stock

Michigan’s Unemployment Insurance Agency will suspend collections from people it says it overpaid during the COVID-19 pandemic. The new policy starts next week.

The agency agreed to halt collections as part of an ongoing lawsuit, which claims the state forcibly collected benefits from people it says were overpaid without giving them a chance to contest that finding. The suit says that violates the due-process rights of people who were subject to collection.

In August, a judge ordered the agency to stop collecting from people who were challenging their overpayment finding. But the state has now agreed to stop collecting from anyone who was issued special federal supplemental benefits since March 2020. The state blames the overpayment errors on the federal government.

David Blanchard, an attorney for the plaintiffs in the case, said stopping collections was the right thing to do.

Blanchard said a recent unemployment agency implementation report confirmed what many already suspected: That “the automated system used by the agency is unable to distinguish, unable to find, what's a valid collectible overpayment, versus something that's still pending appeal, where a person has not had an opportunity for a hearing.”

Blanchard said this agreement will provide relief to at least tens of thousands of people, and prevent “hundreds of millions, perhaps billions of dollars of collections — improper, illegal collections — that have been ongoing and will now be stopped.”

Unemployment Insurance Agency spokesman Nick Assendelft said in an email that “the collections suspension includes all debts established on claims since March 1, 2020, to protect claimants’ rights to due process while the agency addresses pending protests and appeals.” The suspension starts next week.

Blanchard said the next step in the lawsuit is a decision on whether to grant it class-action status.

Sarah Cwiek joined Michigan Public in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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