Ask The Lawyer By: Daniel A. Gwinn, Esq. PART II: From Bad To Worse And Then Some



 by: Daniel A. Gwinn, Esq. & Laura Bradshaw Tucker, Esq.

In the second of our series on the Michigan Unemployment Agency (UIA), we present a case study where an unemployed worker was wrongly assessed penalties because of the UIA’s errors and failure to act upon his application.

Case Study #1 — Never heard back

Joe Black[1] got a full-time job at a sales establishment, and worked there for over a year while studying for an MBA. Then, as business slowed, he was laid off. He found another job, also in sales, but this job paid on straight commission. After four months of work during which he had earned an average of only $3 per hour, most of it in commissions for which he had not yet been paid, Joe gave two weeks’ notice — and filed for unemployment. At the time he left the company, Joe was owed several hundred dollars for work he had performed.

When Joe completed his application for benefits, he was asked to list how much he earned in each of the past several quarters. He had not received payment from the straight-commission employer (SCE) in that time frame, and did not see any place to indicate that he hoped to receive payment, so he filled out the form, indicated he had worked for SCE, but omitted the unpaid commission.

Shortly after he applied for unemployment, Joe received a “Monetary Determination,” letter from the UIA stating he was eligible for 20 weeks of benefits. In its letter, the UIA noted that wages Joe earned from the SCE were not being used to establish his claim for benefits and added it was “investigating the discrepancy.”

Language buried in boilerplate in the text of the UIA’s letter informed Joe “if a later redetermination or decision holds that you were not entitled to receive all or part of these benefits, you will be required to repay the benefits improperly received.” This language was included in a section on “Protest Rights”; Joe had no disagreement with the benefit amount awarded and had no reason to review his right to protest. There was no mention in the “Protest Rights” section of this form letter of any penalties that might be imposed if the UIA later found its decision to award benefits was improper and based on deliberately misleading statements or omissions of the claimant.

About a month after Joe had been approved for benefits, and had started receiving unemployment, SCE – which was only being required to pay a minuscule portion of the benefits – wrote the UIA and objected to paying anything because Joe had quit “without good cause” and was therefore ineligible.

Although the UIA had questioned Joe’s eligibility for benefits from the start, and received a letter less than two weeks after the young man began receiving benefits, it did nothing to investigate the situation for 10 months.

And then, long after his 20 weeks of benefits had expired, Joe received two “Requests for Information Relative to Possible Ineligibility or Disqualification” in the mail. The first pages of the two letters were identical. However, on the second page, one of the letters asked for information about why Joe had left SCE, and the other letter asked for the reasons[2] he had “intentionally provided false information to obtain benefits [he was] not entitled to receive.” Joe was given ten days to respond to the requests. Joe, who believed the two letters were duplicates, and had not read the questions relating to the reasons he left SCE, answered the question about misrepresentation only. He indicated he had answered all questions truthfully. He indicated he had received a payment from SCE after he had begun to receive benefits, but had not known how to report this, and said he figured since he was approved for benefits, and benefits were paid to him that he must have been eligible for benefits. He asked the UIA to contact him if it needed additional information.

The UIA did not contact him. Instead it sent him a Notice of Determination, finding he had intentionally “misled and/or concealed information to obtain benefits [he was] not entitled to receive.” That same day the UIA sent Joe a List of Overpayments and Restitution: $6,180 principal plus $24,720 restitution for a whopping total of $30,900. The $6,180 represented all the unemployment benefits Joe had received, benefits the UIA had continued to pay him even after it had received the letter from the former employer. (At the time the UIA received that letter, Joe had been paid only $618 in benefits.) The $24,720 was a quadruple penalty, routinely assessed by the UIA whenever it determines benefits were received as a result intentional misrepresentation. Although the statute authorizing quadruple penalties makes such penalties discretionary, MCL 421.54(b)(ii), the UIA treats the quadruple penalty as mandatory in cases in which benefits of more than $500 are obtained through misrepresentation. (The discretionary penalty of double the amount due for misrepresentation involving less than $500 is also treated as mandatory.)

A shaken Joe logged on to his on-line UIA account, MiWAM, to see whether he could appeal the determination. He couldn’t find anything labeled “appeal” on the UIA website but located a section titled waiver, and completed an on-line waiver request a few weeks after receiving the Request for Restitution. His request was denied: Claimants found to have deliberately misrepresented information to the UIA to obtain benefits are not eligible for a waiver. Where the UIA had taken the best part of a year to investigate its questions about Joe’s eligibility, it denied his waiver request in less than a month.

Joe did not have the funds to pay the UIA. And the interest on the amount due kept compounding. By the time he contacted Gwinn Tauriainen, his balance due was $31,519.60 (more than $600 in interest had accrued).

Gwinn Tauriainen appealed the determination of misrepresentation and the underlying finding that Joe was ineligible. The UIA denied the appeal on procedural grounds: Joe had not filed his appeal within 30 days, so his right to appeal was lost.

Gwinn Tauriainen managed to overcome that statutory hurdle by arguing that Joe’s request for a waiver was an attempted appeal, which the UIA had never considered.

Finally, Joe got his day in (administrative) Court, and was ultimately able to address the determinations against him. The Administrative Law Judge found that Joe had not attempted to deliberately mislead the UIA. The quadruple penalty was reversed. The judge also noted that based on the few and tardy commissions Joe received from SCE, Joe’s decision to quit the company might not have disqualified him from receiving benefits. But “further determinations” were left to the UIA.

Although Joe had to pay attorneys’ fees (which can range from approximately $1,500 to more than $5,000, depending on the complexity of the case and the necessity of a hearing), Joe’s bill to the UIA was reduced by over $24,000.

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

[1] Names and identifying details have been changed to protect the confidentiality of those involved.

[2] Guilty until proven otherwise: the UIA’s form assumes misrepresentation as a fact, and asks for the reasons a Claimant committed this fraud.

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.

By: Daniel A. Gwinn, Esq.
Attorney and Counselor at Law
901 Wilshire Drive, Suite 550
Troy, MI 48084
(248) 247-3300
(248) 247-3310 facsimile