useapen
2023-12-30 06:15:18 UTC
The Michigan agency in charge of unemployment benefits doled out hundreds
of millions of dollars to people who are potentially ineligible, including
some who were in prison or dead, according to the findings of the Office
of the Michigan Auditor General.
Even after determining people who filed claims were in prison or dead, the
Unemployment Insurance Agency still paid them $1.7 million, the auditor
found.
When fraud was identified by the agency's investigations unit, the agency
undercalculated penalties by nearly 50% due to issues with its internal
computer system, the auditor found. And while it still can pursue an
additional $840 million in fraud penalties, the agency rarely attempted to
identify fraudsters, recoup ill-gotten benefits or assess penalties in a
few selected transactions reviewed by the auditor.
The findings, released Wednesday, are the latest in a series of reviews by
the auditor of the beleaguered agency, which operates under the Department
of Labor and Economic Opportunity.
Agency leaders said they made changes and pledged continued improvements.
We will continue to work cooperatively with the (auditor), as we have for
the last three years on these issues. We appreciate their partnership in
reform, agency Director Julia Dale said in a news release.
The total findings include:
Between January 2020 and October 2022, the state paid $245 million in
payments to people potentially ineligible, including dead people, those in
prison, residents of long-term care facilities and those employed by the
agency or the labor department.
The agency undercalculated fraud penalties by 49.4% because of issues with
an internal data system. The agency could still pursue up to $840 million
in additional penalties.
After reviewing a series of 30 cases, the auditor found the agency did not
try to identify 70% of fraudsters.
In the same cases, the agency did not attempt to recover 96.7% of related
payments or assess fraud penalties.
The agency also did not refer 90% of these selected fraud cases to law
enforcement.
Agency says it's reforming, promises to do better
The agency partially agreed with all of the auditor's findings. It noted
that many of these issues stem from long-standing problems identified in
previous audits, leaders are aware of the problems and working to address
them.
Since the end of the global pandemic, and under new leadership at UIA, we
have built an entirely new bureau and overhauled existing systems to fight
fraud and provide better service for Michigan workers and businesses, and
data proves that these efforts are paying off, agency Director Dale said.
The release noted that the agency did not think the selected cases
reviewed were reflective of all of the agency's work. It also noted it has
recovered more than $90 million through pursuing fraudulent actors.
The audit notes almost 5,000 claims came from people who were
incarcerated, with another 3,000 coming from people who were actually
dead. While the agency says it has a system in place to identify and flag
these potential transactions, the auditor said that system appeared to
fail in at least some cases.
"(The agency) performed data analysis for incarcerated and deceased
claimants later in our audit period but did not take meaningful action to
follow up on the majority of the matches because it mistakenly believe the
requisite fact finding would soon be automated. (The agency) paid at least
$1,710,000 to claimants after identifying them in the analyses," the audit
states.
The agency said it now has an automated process to check the identity of
those filing claims with death and incarceration records.
The auditor also found claims going to agency contractors and potentially
to labor department employees. The same analysis pointed to people likely
too young or too old to legitimately receive benefits: 161 claims came
from people younger than 14 while another 89 came from people purportedly
100 years old or older.
The agency told auditors it has a system in place to accurately review the
ages of people filing claims.
While the agency told the auditor it has implemented nearly all of the
recommended improvements, the auditor disagreed with the agency's
assertion that most of the issues happened at the beginning of the
pandemic.
"These challenges didnt come up overnight nor will the solutions. But
we are making major strides in solving them and reshaping the way we
interact with the public," states part of the agency's response to the
audit.
Dealing with flood of pandemic claims
Nearly four years later, the agency is still dealing with the fallout from
the pandemic when millions of workers filed for jobless benefits as
businesses closed and others took advantage of the more generous benefits,
filing fraudulent claims.
More than 5.9 million claims were filed in the pandemic by more than 3.5
million claimants, the agency said.
The agency hired 30 new limited-term employees in October with a $2.6
million grant from the U.S. Department of Labor to expand the agencys
fight against fraud by pursuing bad actors and recovering federal and
state money stolen from taxpayers, the agency said.
The employees join the agency's Fraud and Investigations Division team.
The majority of their time will be spent reviewing claims filed by
impostors nearly all from May and June 2020 where no payments were
issued.
To clear those cases, staff must manually process the claims to remove
them from the UIAs computer system, the agency said. The agency is
replacing its decade-old unemployment benefits system, and a new Deloitte
system is expected to be fully operational in 2025.
Meanwhile, still other claimants were told they were eligible for benefits
in the pandemic but have received only a portion of the money theyre
owed, if anything at all. They are still fighting for benefits theyre
owed.
This is the fifth and final state audit of the agency over its performance
in the pandemic. The most recent audit, released about a year ago, found
the agency improperly granted overpayment waivers to some claimants who
were told they were overpaid benefits in the pandemic while not
considering others who met the waiver criteria.
The audit estimated the agency may have improperly granted $1.7 billion in
overpayment waivers but didn't consider waivers for claims totaling $280.7
million that met its criteria.
Contact Dave Boucher: ***@freepress.com or on X, previously called
Twitter, @Dave_Boucher1.
Contact Adrienne Roberts: ***@freepress.com.
of millions of dollars to people who are potentially ineligible, including
some who were in prison or dead, according to the findings of the Office
of the Michigan Auditor General.
Even after determining people who filed claims were in prison or dead, the
Unemployment Insurance Agency still paid them $1.7 million, the auditor
found.
When fraud was identified by the agency's investigations unit, the agency
undercalculated penalties by nearly 50% due to issues with its internal
computer system, the auditor found. And while it still can pursue an
additional $840 million in fraud penalties, the agency rarely attempted to
identify fraudsters, recoup ill-gotten benefits or assess penalties in a
few selected transactions reviewed by the auditor.
The findings, released Wednesday, are the latest in a series of reviews by
the auditor of the beleaguered agency, which operates under the Department
of Labor and Economic Opportunity.
Agency leaders said they made changes and pledged continued improvements.
We will continue to work cooperatively with the (auditor), as we have for
the last three years on these issues. We appreciate their partnership in
reform, agency Director Julia Dale said in a news release.
The total findings include:
Between January 2020 and October 2022, the state paid $245 million in
payments to people potentially ineligible, including dead people, those in
prison, residents of long-term care facilities and those employed by the
agency or the labor department.
The agency undercalculated fraud penalties by 49.4% because of issues with
an internal data system. The agency could still pursue up to $840 million
in additional penalties.
After reviewing a series of 30 cases, the auditor found the agency did not
try to identify 70% of fraudsters.
In the same cases, the agency did not attempt to recover 96.7% of related
payments or assess fraud penalties.
The agency also did not refer 90% of these selected fraud cases to law
enforcement.
Agency says it's reforming, promises to do better
The agency partially agreed with all of the auditor's findings. It noted
that many of these issues stem from long-standing problems identified in
previous audits, leaders are aware of the problems and working to address
them.
Since the end of the global pandemic, and under new leadership at UIA, we
have built an entirely new bureau and overhauled existing systems to fight
fraud and provide better service for Michigan workers and businesses, and
data proves that these efforts are paying off, agency Director Dale said.
The release noted that the agency did not think the selected cases
reviewed were reflective of all of the agency's work. It also noted it has
recovered more than $90 million through pursuing fraudulent actors.
The audit notes almost 5,000 claims came from people who were
incarcerated, with another 3,000 coming from people who were actually
dead. While the agency says it has a system in place to identify and flag
these potential transactions, the auditor said that system appeared to
fail in at least some cases.
"(The agency) performed data analysis for incarcerated and deceased
claimants later in our audit period but did not take meaningful action to
follow up on the majority of the matches because it mistakenly believe the
requisite fact finding would soon be automated. (The agency) paid at least
$1,710,000 to claimants after identifying them in the analyses," the audit
states.
The agency said it now has an automated process to check the identity of
those filing claims with death and incarceration records.
The auditor also found claims going to agency contractors and potentially
to labor department employees. The same analysis pointed to people likely
too young or too old to legitimately receive benefits: 161 claims came
from people younger than 14 while another 89 came from people purportedly
100 years old or older.
The agency told auditors it has a system in place to accurately review the
ages of people filing claims.
While the agency told the auditor it has implemented nearly all of the
recommended improvements, the auditor disagreed with the agency's
assertion that most of the issues happened at the beginning of the
pandemic.
"These challenges didnt come up overnight nor will the solutions. But
we are making major strides in solving them and reshaping the way we
interact with the public," states part of the agency's response to the
audit.
Dealing with flood of pandemic claims
Nearly four years later, the agency is still dealing with the fallout from
the pandemic when millions of workers filed for jobless benefits as
businesses closed and others took advantage of the more generous benefits,
filing fraudulent claims.
More than 5.9 million claims were filed in the pandemic by more than 3.5
million claimants, the agency said.
The agency hired 30 new limited-term employees in October with a $2.6
million grant from the U.S. Department of Labor to expand the agencys
fight against fraud by pursuing bad actors and recovering federal and
state money stolen from taxpayers, the agency said.
The employees join the agency's Fraud and Investigations Division team.
The majority of their time will be spent reviewing claims filed by
impostors nearly all from May and June 2020 where no payments were
issued.
To clear those cases, staff must manually process the claims to remove
them from the UIAs computer system, the agency said. The agency is
replacing its decade-old unemployment benefits system, and a new Deloitte
system is expected to be fully operational in 2025.
Meanwhile, still other claimants were told they were eligible for benefits
in the pandemic but have received only a portion of the money theyre
owed, if anything at all. They are still fighting for benefits theyre
owed.
This is the fifth and final state audit of the agency over its performance
in the pandemic. The most recent audit, released about a year ago, found
the agency improperly granted overpayment waivers to some claimants who
were told they were overpaid benefits in the pandemic while not
considering others who met the waiver criteria.
The audit estimated the agency may have improperly granted $1.7 billion in
overpayment waivers but didn't consider waivers for claims totaling $280.7
million that met its criteria.
Contact Dave Boucher: ***@freepress.com or on X, previously called
Twitter, @Dave_Boucher1.
Contact Adrienne Roberts: ***@freepress.com.