TRAVERSE CITY — Software once used by Michigan's Unemployment Insurance Agency erroneously accused tens of thousands of people who filed for benefits of intentional misrepresentation, and one attorney fears there could be many more.

The Michigan Integrated Data Automated System had a 93 percent error rate in 22,427 supposed fraud cases it auto-adjudicated between October 2013 and Aug. 4, 2015, and 20,965 of those were later overturned. That's according to UIA data reported to U.S. Rep. Sander Levin, D-Mich.

Levin has asked the state to review the remaining 30,000 fraud determinations made during the same time period, once in a letter to Gov. Rick Snyder and again in December. In a statement he said the review needs to go beyond a small subset of the cases, and while a few thousand have been repaid after being incorrectly fined, only a full audit will determine if the problem has been solved.

"We have to make sure that everybody who was owed money is paid," he said Friday. "They have to make sure that the record is clarified in every case where there was a false allegation of fraud. I mean, a 93 percent error rate is enormous."

A February 2016 Michigan Office of the Auditor General report found a similar error rate among misrepresentation appeals made from October 2013 to June 2015.

Attorney Jennifer Lord said she represents claimants who are suing in state court after being financially harmed by MiDAS' "golden touch." There's a separate class-action suit over the same issue in federal court.

The software, once left in charge of rooting out fraud cases, pinpointed people with discrepancies in their files and notified them they were suspected of fraud, Lord said. Those notifications went into online system portals with little or no other notice, and gave claimants 10 days to respond.

Those who responded were given fact-finding questionnaires with vague questions and predetermined responses, Lord said.

"For the question, 'Why did you apply for unemployment,' one of the preselected answers is, 'Because I needed the money,'" she said. "If they answered 'I needed the money,' it was an automatic final determination of fraud."

An April 2016 state Office of the Auditor General report criticized the agency's process for adjudicating intentional misrepresentation issues between October 2013 and April 2015. The UIA didn't get or factor in enough supporting information, asked claimants only two questions when making a redetermination and made them based on questions that didn't provide sufficient proof of fraud.

Those who received a written redetermination of fraud weren't given the reasons or supporting facts behind it, according to the report.

Lord said those wrongfully netted by the software had to pay staggering fines — Michigan levies penalties equal to four times what a claimant received in unemployment payments. And because the system had access to the state and U.S. departments of treasury, it could garnish peoples' wages, seize their tax refunds or both.

Fines the system collected totaled $56.9 million, money dumped into a state fund that ballooned from $3.1 million in 2011 to $68.8 million by September 2014, according to a fact sheet from the U.S. House of Representatives' Ways and Means Committee.

Lord pointed out Snyder could soon sign a bill reallocating $10 million of that money into the state's general fund. She believes the money should be held in trust until the state is certain everyone wrongfully accused and fined has been repaid.

"This is not the state's money, it is not taxpayer money, it is money that was garnished from workers' wages," she said.

Lord said she wants those wrongfully accused to be repaid and to ensure the state agency never repeats the mistake. The case is in the state Court of Appeals and Lord wants it made into a class-action lawsuit. It's a class that could be as large as 60,000 people who were potentially harmed by the system.

Levin's office stated the UIA made 53,633 fraud determinations between October 2013 and August 2015.

The UIA changed its procedure in August 2015, said David Murray, Department of Talent and Economic Development communications director. In most situations fraud cases were overturned after the agency received additional information.

"It was the computer system identifying people, and we changed that because we wanted to have trained staffers have the final say before letters go out to people," he said.

Michigan lawmakers have since passed a bill codifying the agency's changes, Murray said. The agency has also addressed issues with the notices it sends for suspected fraud, and will consider Levin's request to review the roughly 30,000 other fraud cases.

"We realize that people come to the UIA for unemployment insurance during a very difficult and stressful time in their lives, when they've lost a job," he said. "We want to make sure that they get the benefits that they're entitled to and that we can do that quickly so they can get the assistance that they need as they look to move forward."

The agency also must remain vigilant against fraud, Murray said.

Anyone who believes the agency wrongfully accused them of fraud should go to their local UIA problem resolution office, Murray said.

In Traverse City, it's at 1209 S. Garfield Ave. inside Northwest Michigan Works.

As for the lawsuits, Murray said he couldn't speak about pending litigation.

Levin said he'll keep track of the UIA's actions; he sits on the House Ways and Means Committee, which oversees the joint state-federal agency.

"But it's primarily a state's responsibility to take the necessary steps to come clean and to make sure that people aren't injured because of the callousness of the state," he said.

Total Fraud Determinations, October 2013 – August 2015: 53,633

Total Cases Reviewed by State: 22,427

Total Fraud Determinations Upheld: 1,462

Total Fraud Determinations Overturned: 20,965

Individuals requiring repayment: 2,571

Amount repaid to individuals: $5,431,821

Source: Michigan Unemployment Insurance Agency, via the office of U.S. Rep. Sander Levin, D-Mich.

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