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FROM BAD TO WORSE AND THEN SOME:
by: Daniel A. Gwinn, Esq. & Laura Bradshaw Tucker, Esq.

For the next several weeks, GWINN TAURIAINEN PLLC takes on the Michigan Unemployment Agency (UIA), to inform its friends and clients about the risks associated with filing for unemployment benefits. A system designed to help out-of-work people has, in many cases, resulted in hardship that ultimately proved worse than being unemployed in the first place. This is the first issue in a continuing series about the UIA and the serious problems Michigan residents have encountered when dealing with that agency.

PART I: THE MICHIGAN UNEMPLOYMENT AGENCY

A college student applies for unemployment, but does not know how to report earnings he has not received. A widowed mother misunderstands the questions she is asked by Michigan’s Automated Response Voice Interactive Network (MARVIN) and fails to report part-time earnings to the Unemployment Insurance Agency (UIA). An unemployed worker is denied benefits because she quit an occasional, after-work job from which she earned a total of $53, before being laid off from her full-time position.

The legislative intent of the Michigan Employment Security Act is to “safe guard the general welfare by dispensing benefits to ameliorate the disastrous effects of involuntary unemployment.” Schultz v Oakland County, 187 Mich App 96, 102-103 (1991). But when a claimant makes a mistake, or is suspected of deliberately misleading the UIA, the negative effects of involuntary unemployment pale in comparison to the disastrous financial impact of being on the wrong side of a UIA decision.

The mistakes are often simple, but the UIA does not treat them as such. Aided by a robotic system known as MIDAS, the UIA turned honest mistakes or misunderstandings into nightmares for thousands of unemployed workers, as MIDAS mechanically found deliberate misrepresentation and fraud where a confused or innocent claimant simply made an error.

But MIDAS made mistakes of its own. In fact, it made a lot of them: A recent report revealed that from 2013 to 2015 MIDAS had a 93 percent error rate. Those errors, which translate into incorrect findings of “misrepresentation” against thousands of unemployed workers, have swollen the State of Michigan’s coffers by more than $150 million — from $3.1 million in 2011 to $155 million in October 2016 — largely from quadruple penalties assessed against the unemployed for “misrepresentation” to the UIA and interest due on the repayment of benefits to which the UIA belatedly finds workers unentitled. The penalty is equal to four times the amount of all benefits received.

Misrepresentation encompasses acts such as deliberately failing to report income from part-time or freelance work; failing to report severance pay; failing to indicate a job loss was voluntary or for cause, and failing to report a return to full-time work. Problems arise when the UIA, via its automated system or through its agents, finds misrepresentation where none exists, or, where there is a discrepancy, labels as intentional acts that were negligent, or done in ignorance.

An out-of-control, unwieldy system is not the only ill affecting the UIA and the unemployed workers who turn to it each year for help. The UIA’s internal roadblocks can turn applicants for unemployment into victims of bureaucratic inefficiency. Information the UIA claims it needs to determine whether a claimant is eligible is often not requested in a timely fashion, or, when received, ignored. The result is that many claimants, who are not eligible for benefits, continue to receive them in happy ignorance – and only learn of their disqualification months after exhausting benefits. Nonpayment of benefits and interest can quickly exceed thousands of dollars.

Communication from the UIA is itself confusing. A claimant the UIA suspects may be ineligible for benefits or who may have committed fraud are sometimes sent separate, but almost identical letters loaded with boilerplate language: one for disqualification of benefits and the other alleging misrepresentation in the claimant’s application for benefits. Unraveling the intent of the UIA’s correspondence is, in and of itself, no small feat.

And claimants, who often have no idea that they must advise the UIA of any change in address even after they have exhausted their unemployment benefits or found work (or any duty to check their on-line account with the UIA), are found guilty of misrepresentation and subjected to quadruple penalties, without ever having received notice that there was a question about their eligibility.

Several cases handled recently at Gwinn Tauriainen show how easily an unemployed worker can be found guilty of misrepresentation and stuck with thousands of dollars in penalties, often without any right to appeal, for acts that were done without any intent to misrepresent or deceive.

Next issue, we will present our first case study – where the UIA imposed penalties exceeding tens of thousands of dollars against an unemployed worker without cause.

To view the series in full, please visit our website at www.gwinntauriainenlaw.com.

The lawyers at GWINN TAURIAINEN PLLC are experienced attorneys and are happy to answer your questions. Give us a call for a free initial telephone consultation about your legal needs. For consideration of your questions in our web column, please submit your inquiry on the “Contact Us” page of our website at www.gwinntauriainenlaw.com.

Part Two – click here

GWINN TAURIAINEN PLLC, is a Troy based law firm representing clients from Warren, Sterling Heights, Ferndale, Royal Oak, Oak Park, Oakland and Wayne Counties and all of Southeast Michigan.

ASK THE LAWYER
By: Daniel A. Gwinn, Esq.
Attorney and Counselor at Law
GWINN TAURIAINEN PLLC
901 Wilshire Drive, Suite 550
Troy, MI 48084
(248) 247-3300
(248) 247-3310 facsimile
[email protected]
www.gwinntauriainenlaw.com