Michigan Agrees to Spend $20 Million to Settle False Unemployment Fraud Cases

by Bruce Walker


Part of the many woes plaguing Michigan’s Unemployment Insurance Agency since before the beginning of the COVID-19 pandemic may be resolved but may cost state taxpayers $20 million.

The Michigan attorney general’s office announced Thursday the state has reached a tentative $20 million settlement to resolve a class-action suit against the UIA that claimed the agency falsely accused unemployment recipients of fraud and seized private property without due process.

Attorney General Dana Nessel and the Royal Oak law firm Pitt, McGehee, Palmer, Bonanni & Rivers, representing the plaintiffs, announced the proposal.

If approved by the Michigan Court of Claims, the settlement will resolve seven years of litigation against the UIA. At issue in Bauserman v. Unemployment Insurance Agency was the UIA’s automated MIDAS system, which inaccurately flagged “thousands of Michiganders” for unemployment fraud, according to a release from Nessel’s office. In response to the erroneous MIDAS reporting, the state wrongfully seized “paychecks, income tax refunds, and other assets without due process.”

“First, as counsel for the class action plaintiffs, we fought hard for seven years to vindicate the plaintiffs’ civil rights,” Michael Pitt, counsel for the plaintiffs, said in a statement. “Second, the attorney general and the state of Michigan demonstrated the will to come to the table and make this right, and by agreeing to this settlement, we believe they have done so.

“Because of the parties’ willingness to engage in a meaningful mediation process, we are confident that this settlement accounts for the money that members of the class lost because of the state’s use of a fraud auto-adjudication system.”

Rep. Steve Johnson, R-Wayland, chairman of the Michigan House of Representatives Oversight Committee, has addressed the failures of the UIA during multiple committee meetings.

“I’m glad to see some resolution to unemployment issues back in 2015 but the Whitmer administration still has to account for the Unemployment Agency’s fiasco during the pandemic,” Johnson told The Center Square. “From losing billions of taxpayer money to fraud, wrongly accusing Michiganders, that were put out of a job by Whitmer’s shutdown, of fraud, to the worst in the nation customer service that left workers on the phone for hours and then hung up on them, Whitmer hurt the state of Michigan and needs to be held accountable. And don’t forget her failed UIA director that she gave over $80,000 in taxpayer money in return for his silence.”

Julia Dale was named UIA director after the abrupt 2020 departure of Steve Gray, the former director, with $85,000 of taxpayer-funded money.

“Today’s settlement resolves long-standing litigation involving the Unemployment Insurance Agency and parallels our commitment to reform the agency by providing exemplary customer service,” Dale said. “Those reforms include upcoming changes to the decade-old MIDAS computer system, instilling a human-centered focus at the agency, issuing more than 62,000 overpayment waivers, rebuilding the Trust Fund, redesigning our public website for easier access, reducing the case backlog, and implementing ethics and security clearance policies for employees and contractors.”

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Bruce Walker is a regional editor at The Center Square. He previously worked as editor at the Mackinac Center for Public Policy’s MichiganScience magazine and The Heartland Institute’s InfoTech & Telecom News.


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One Thought to “Michigan Agrees to Spend $20 Million to Settle False Unemployment Fraud Cases”

  1. Mel

    What about the rest of the people who were told they had to pay it back. The class action was not offered to all the People. Whitmer didn’t create the problems the last Governor did.