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Michigan's unemployment system is an automated mess

Michigan's Unemployment Insurance Agency (UIA)
Flickr - http://j.mp/1SPGCl0


State officials say Michigan’s unemployment computer system is saving money, streamlining the unemployment process, and rooting out unemployment fraud. It's called the Michigan Integrated Data Automated System, or MiDAS, and it's been handling unemployment claims in Michigan since 2013.

But a mounting chorus of critics say the system is brutalizing people who have been mistakenly accused by the state of collecting more unemployment benefits than they’re entitled to. That the lack of human interaction in this automated, business-like approach is ruining lives because of mistakes being made by a computer software system.

University of Michigan Law Professor Steve Gray is the General Manager of the Michigan Unemployment Insurance Project, a nonprofit that helps Michigan workers with unemployment issues.

Gray tells us that MiDAS replaced human adjudicators, which in itself can be a good thing. Computers are more efficient and consistent than humans, and they cost less to keep in place.

"As a result of trying to catch people that have committed fraud, we've cast too big a net and we're catching so many more people that actually are innocent."

Beyond pure efficiency, he says that the goal of MiDAS is to catch cases of fraud in the unemployment system.

Unfortunately, according to Gray, MiDAS is a little overzealous in this endeavor.

“As a result of trying to catch people that have committed fraud, we’ve cast too big a net and we’re catching so many more people that actually are innocent,” he says.

When filing for unemployment, Gray tells us that you’re asked a series of questions and you have to choose from a list of pre-selected answers.

He says that this standardized approach is a problem in and of itself, because, “there’s really not a place for you to sort of explain what the situation is. You have to sort of pick one of the answers.”

Once you’ve answered all the questions, your answers go into a database and your employer is notified that you’ve applied for unemployment.

Employers are allowed to contest unemployment eligibility in the state of Michigan, which Gray explains they’re interested in doing because the unemployment system is largely funded through a tax on employers.

The employer is sent a questionnaire. MiDAS looks at the answers given by the applicant and the employer, and Gray says that if it detects any discrepancy it automatically “assumes that the potential fraud there is only on behalf of the claimant.”

The system then sends the claimant another questionnaire, which, according to Gray, isn’t very helpful.

“The questionnaire asks some questions that actually really aren’t that helpful in having you explain what your situation is,” he says. “If the system does not register a response within 10 days, it automatically finds that somebody has committed fraud.”

Gray tells us that it only gets messier from here.

“If you’re one of the lucky ones, you actually do get the notice that says that you committed fraud,” he says. And as soon as 30 days has passed from that notice without appeal, it automatically goes into collections.

“And that’s where bad things start happening,” Gray says. “Puzzlingly, we’re seeing lots of people that get ... the letters that say, ‘you owe us money.’ But they never received the determinations.”

Sometimes, Gray tells us that claimants won’t even receive those letters, and the first time they hear about it is when they see their tax return or wages being garnished.

“The system was created with, I think, the right intentions,” he says. “But the way that it’s currently programmed, it presumes that people commit fraud and it doesn’t give people a really good opportunity to explain what happened.”

Gray says that bringing a little of the human element back to the unemployment claims system could be a good step in the right direction, but the core of the issue lies in presumptions made within the system itself.

There’s a presupposition, he tells us, that most people on unemployment are trying to scam the system, when in reality the statistics show that between two and three percent of benefits are paid out as a result of fraud.

“Lots and lots of people are getting charged, and my experience is 90-plus percent of the people that are being charged are actually innocent,” Gray says. “When these cases do finally appeal, … and they get to a hearing in front of an administrative law judge, almost every case that I’ve seen is dismissed.”

Much of the time, he says the agency itself will come in and determine that there is no evidence of fraud. Which would be nice, he tells us, if it happened before getting all the way to a hearing.

Gray and a fellow professor sent a report to the U.S. Department of Labor spelling out their concerns with the system and asking them to take a look at it.

“We understand there’s been a focus nationally on sort of cracking down on fraud. Which I think we all support,” Gray says. But they’re worried about the unintended consequences caused by the unnecessarily broad net being cast.

Another concern, Gray tells us, is that the system is generating far more determinations of fraud per case than its human counterparts once did. Instead of sending someone one notice explaining why they aren’t eligible for unemployment, he says that MiDAS could send the claimant five or six notices, and then send further notices saying that they’ve committed fraud for each of those.

“We’re worried that they’re using a system to kick out determinations in order to pull down more federal dollars,” he says.

Gray has attempted to get in contact with the agency responsible for MiDAS, but has received no response.

As far as advice for those who are looking to apply for unemployment, Gray tells us it’s best to, “go into it with your eyes open.”

“I hate to say, ‘don’t apply for unemployment because you’re gonna get accused of fraud,” he says, “I’m unwilling to go there.” But he has had many clients tell him that if they had known what they were getting into when they applied for unemployment, they would have looked for other solutions.

Beyond just being aware of what you’re getting into, Gray advises individuals to respond to notices promptly and to reach out to their legislators.

“This is a systemic problem, there’s a lawsuit pending, … I think legislative interest would go a long way toward helping us get the attention of unemployment insurance agencies,” Gray says.

Gray tells us that the Michigan Unemployment Insurance Project has stopped taking in applicants for the time being due to overwhelming demand, but that they’re happy to be contacted and are willing to help individuals looking for representation get in touch with other agencies that can help them.

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