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UIA says latest audit addresses pandemic-era issues either resolved or addressed in agency reforms
December 27, 2023
Agency-led crackdown resulted in charges against 162 fraudsters and 90 convictions; more than $90 million recovered.
Director Julia Dale established a UIA fraud-fighting bureau led by attorney recruited to lead fraud crackdown.
Antiquated Snyder-era technology system to be replaced as part of sweeping UIA reform agenda.
The Michigan Unemployment Insurance Agency (UIA) today received the latest findings from the Office of Auditor General (OAG) on fraud, technology, financial waivers, and other well-documented issues stemming from the COVID-19 pandemic. UIA noted that every pandemic-rooted issue raised by OAG had previously been addressed by the agency and has either been solved or will be resolved as soon as possible. Major reform takes time.
“We will continue to work cooperatively with the OAG, as we have for the last three years on these issues. We appreciate their partnership in reform,” said UIA Director Julia Dale. “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.”
In response to the OAG’s findings, UIA spotlights reforms and changes that have been made that address questionable audit conclusions:
- Finding 1: An aging computer system installed in 2010 has presented tremendous challenges to Michigan businesses, to workers who depend on the UI system, and to the UIA. A system change will be implemented soon that will allow fraud penalties to be applied to federal unemployment assistance programs. The UIA is designing and implementing a brand-new computer system that will significantly ease process changes to address programming issues. The new system will also enhance UIA’s current best practices to allow crossmatches against other state or federal government databases to verify documentation or information supplied to it by claimants or employers.
- Finding 2: Selecting five cases to examine in the audit is not a true sample of all the hard work regulation agents perform to build intentional misrepresentation cases. UIA has referred nearly 240 matters to the U.S. Department of Labor’s Office of Inspector General for investigation. The DOL-OIG focuses on large-scale identity theft schemes, often exceeding $250,000. The agency has also standardized procedures with the Michigan Department of the Attorney General and other law enforcement agencies to collaboratively pursue employee and employer fraud. UIA continues to aggressively pursue bad actors who defrauded Michigan workers and businesses. To date, more than $90 million stolen by fraudsters has been recovered. More than 80 limited-term employees work in the Fraud Division to process past and current fraud cases.
- Finding 3: UIA has already fully implemented recommendations to this finding, which was raised in an earlier OAG audit. The repeated examination of the ways criminals victimized the Agency and Michigan workers in 2020 during the height of the worldwide pandemic lacks important context. Of note: System changes have been made by UIA to check death and incarceration records. Staff work tirelessly to obtain wage records from employers, who don’t always respond. A Legal and Compliance Bureau led by the agency’s Legal Advisor has been created to leverage collaborative anti-fraud practices to pursue bad actors. Since the pandemic, the number of new fraud cases in Michigan has fallen dramatically. Through a series of reforms, the UIA is successfully identifying new fraud attempts, stopping bad actors in their tracks.
- Finding 4: Many of the shortcomings in this finding have been identified in previous reports and audits. UIA has continued to work expeditiously through these matters and has a three-year window to pursue fact-finding on pandemic unemployment assistance (PUA) claims the OAG cites in its audit. Staff did not improperly close matters of new hire separations; they followed established procedures.
In the face of the COVID-19 pandemic, Republican and Democratic leaders urged the UIA to quickly push benefits to the millions of Michiganders whose lives and livelihoods were disrupted by the global economic crisis. At its peak, 77 times more claims were filed with the agency than were filed in an average week before the pandemic, stretching the capacity of UIA personnel as they urgently implemented programs created by Congress to help out-of-work Michiganders. Confusing federal guidelines and a dysfunctional technology system implemented under former Gov. Rick Snyder created many of the claims processes issues cited in today’s audit.
- Letter excerpt: “The UIA’s dedicated team has worked closely on multiple audits with your staff at the OAG to make sure that we identify areas where UIA agency fell short and collectively build a stronger agency to best serve people and businesses in Michigan. The fact is every pandemic-rooted issue raised by the OAG had previously been addressed by UIA — immediately and aggressively – and either has been solved or will be resolved as soon as possible. …”
Read Director Dale's column in today's The Detroit News. Michigan continuing its fight against fraud.
New tools to fight fraud
Another example of the UIA’s aggressive continued anti-fraud efforts is the agency's recent award of a $2,609,000 grant from the U.S. Department of Labor (USDOL) to hire 30 new limited term employees to pursue bad actors and recover federal and state money stolen from taxpayers. The unemployment insurance examiners and regulation agents will work in UIA’s Fraud and Investigations Division through June 2024.
Director Dale is transforming the agency into a national leader for fast, fair, and fraud-free service and recently appointed a Legal Advisor to lead the agency's Legal and Compliance Bureau, which leverages collaborative anti-fraud practices to pursue bad actors.
UIA is in the design phase of its new computer system, which will replace the decade-old MiWAM system used by claimants to file for benefits and employers to pay unemployment taxes. MiWAM uses 2010 technology to address very different needs of 2020 and beyond. The new system, expected to be fully functional in 2025, will incorporate an updated design with robust anti-fraud measures for efficient claims filing and tax processing.
The agency’s aggressive post-pandemic campaign against fraud continues to pay off. To date, 162 people have been charged, 91 convicted, and 69 sentenced. Working with the state Department of Attorney General, federal prosecutors, and local law enforcement, the UIA sends an unmistakable message: If you steal money meant for Michigan workers and businesses, you will be found and prosecuted.
Post-pandemic agency modernization
As part of reforms to improve customer service, UIA has partnered with the Detroit nonprofit design studio Civilla to launch the Claimant Roadmap, a resource that easily explains how to apply for unemployment benefits, as well as First-time Filer Coaching Sessions, where applicants can talk with a UIA employee to get any filing questions answered. In 2024, UIA will launch the Employer Help Center, a resource for Michigan businesses to get answers on unemployment and tax inquiries.
Since being named director of the UIA in October 2021 – the agency's 11th leader in as many years – Director Dale has also:
- Strengthened customer service by adding new advocates to the agency’s Advocacy Program (which provides free legal advice to workers and employers who appeal UIA determinations) and boosted pay for advocates by 30 percent.
- Applauded staff for scoring 100 percent for the third year in a row from the USDOL, meeting the reasonable assurance of quality benchmark for employer audits in 2022, 2021, and 2020.
- Secured a more than $2.3 million equitable access and communications grant from the USDOL Tiger Teams initiative to redesign and simplify how UIA engages with employers and develop a help center for accessing agency services.
- Reassigned staff and resources to address the largest categories of claims that are contributing to the agency’s case backlogs.
- Revamped the agency’s public website at Michigan.gov/UIA to be more user-friendly and responsive for those accessing services using cell phones or tablets.
- Rebuilt the UI Trust Fund to more than $2.3 billion (and growing), from which weekly benefits are paid to workers.
- Approved more than 76,000 overpayment waivers (with more to come) of state and federal benefits paid during the global pandemic, waiving more than $555 million.
- Halted overpayment collections on claims filed since March 1, 2020, while the agency addresses pending protests and appeals. More than $13 million has been refunded to workers since May 2022.
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