LANSING — Austin Bluemel was sure the letter was a fluke.

The state’s Unemployment Insurance Agency must have made a mistake when it sent the Traverse City restaurant worker a letter stating he’d been overpaid benefits and had to pay it all back — $17,500.

“It didn’t say why it determined I was overpaid the benefits I was given,” Bluemel said. “The tricky thing is, there is no way really to communicate well with the Unemployment Insurance Agency.”

That was not for a lack of trying, however.

As soon as he got the letter, Bluemel said he logged into his UIA account on the online portal and began sending in messages every day, trying to find out what was going on.

When that didn’t work, he called the 1-800 number, but got a recording referring him back to the portal. Bluemel said he tried the online chat feature, but was told since he’d filed an official protest — faxing was the only way to do that, he said — chat staff told him they couldn’t help.

“Needless to say, I have not had any closure on this overpayment determination of unemployment benefits with the UIA, the Michigan UIA, since I got that letter January,” Bluemel said. “Every time I try to communicate with them, they say my protest is in limbo.”

The letter may have been a mistake but it definitely wasn’t a fluke, says Lisa Ruby, a public benefits law attorney with the Michigan Poverty Law Program in Ypsilanti.

Instead, it’s evidence the UIA computer tangle that falsely flagged as many as 46,000 people for fraud beginning in 2015, hasn’t been fixed, she said.

“This comes back to the MiDAS system that everybody hates and is set up to find fraud and deny benefits,” Ruby said. “It needs to be scrapped. You can’t fix it.”

Two Traverse City attorneys — Mark Risk and Jay Zelanock — who represented clients falsely flagged for fraud several years ago, said this latest UIA issue has brought back bad memories.

“It seems reminiscent of the issues claimants encountered back then,” Zelenock said. “They were bogus and unsubstantiated accusations and it wasn’t right. Something seems like it’s still amiss and it certainly bears looking into.”

The state legislature is doing that, said Rep. Jack O’Malley, who serves on the House Oversight Committee which spent an hour Thursday questioning UIA Acting Director Liza Estlund Olson.

Olson took over the post last fall, after the November resignation of Steve Gray.

Olson said in a press release issued the day of the oversight committee hearing, the UIA is seeking funds to replace the system, but it won’t happen fast.

“It’s been nearly 10 years since we first started using our current system and we want to provide a better, more agile user experience for both our claimant and employer users,” Olson said, adding the process will be “lengthy.”

O’Malley said his office has been bombarded with calls, and like many state-level politicians, he and his staff operated as a de-facto claimant problem-solving team over the past year and a half.

“There are good people who work there at the UIA, and I get that they were deluged, but be transparent with the people you’re trying to serve,” O’Malley said. “Tell people what’s going on.”

The UIA did issue a press release on May 13, updating the public on unemployment claims, then another release on July 30, regarding the letters and any overpayment having to do with recertification requirements , said UIA Communications Manager Nick Assendelft.

Yet Ruby said she, too, thinks the UIA’s transparency issues made things worse in an already difficult time.

For example, between October and December, staff with the U.S. Department of Labor, Employment and Training Administration conducted an “enhanced desk monitoring review” — essentially an audit — of how Michigan paid out Pandemic Unemployment Assistance money, or PUA.

PUA is a federal program that didn’t exist before the CARES Act was passed by Congress on March 25, 2020. It provided up to 50 weeks of between $160 and $362, to those workers ineligible for regular unemployment such as part-time employees, those who are self-employed as well as some independent contractors.

The federal review shows investigators found errors in Michigan’s stated eligibility requirements, as well as a problem with the box claimants were supposed to check acknowledging that any misrepresentations in their applications could be construed as fraud.

In total, three federal compliance reviewers who visited UIA offices highlighted 11 findings and four areas of concern, the federal report shows.

The UIA, Ruby said, decided to communicate all this to claimants in a single correspondence.

They also didn’t provide the 11-page review report to House Oversight Committee members — Ruby did that herself, she said.

“The UIA letters essentially say, ‘Oops sorry, our bad. We know we asked you four questions, but they weren’t the proper questions, so if you qualified for PUA under one of those questions, you’re not eligible,’” Ruby said.

Some letters, like the one received by Bluemel, state the benefits must be repaid.

Others state the overpayment was a UIA error and repayment not only isn’t necessary, but the state is issuing three new questions, and, as Ruby put it, “If you’re eligible under one of those, you’re good. It’s incredibly confusing.”

Some claimants received conflicting letters — one that said they needed to pay back the money and one that said they didn’t, Ruby said.

In recent months, between 600,000 and 700,000 letters were mailed by the UIA to claimants — 4,782 of which were sent to those in Antrim, Benzie, Grand Traverse, Kalkaska and Leelanau counties, information provided to the Record-Eagle from the UIA shows.

The four improper questions, or what the UIA calls “non-qualifying reasons for PUA” are:

Your work hours have been reduced as a direct result of COVID-19

You are seeking part-time employment and affected by COVID-19

You have insufficient work history to qualify for regular unemployment compensation and are affected by COVID-19

You are unemployed or working less than regular hours as a result of COVID-19 and were denied benefits on another claim

The three proper questions, or what the UIA calls “three new reasons individuals may qualify for PUA” are:

I was denied continued unemployment benefits because I refused to return to work or accept an offer of work at a worksite not compliant with local, state or national health and safety standards directly related to COVID-19.

I provide services to an educational institution or educational service agency and am unemployed or partially unemployed because of volatility in the work scheduled that is directly caused by the COVID-19 public health emergency.

I am an employee and my hours have been reduced or I was laid off as a direct result of the COVID-19 public health emergency.

In the coming weeks, Ruby said information provided to the Michigan Poverty Law Program shows the UIA plans to send out another 100,000 letters.

“Who are these people,” Ruby wondered aloud. “Why weren’t they included in the first batch that were mailed out? Nobody knows yet.”

Bluemel said he hasn’t spent a dime of his unemployment benefits — the money is still in his bank account because he says he didn’t feel safe using it. Not even to buy things he needs — that’s what “limbo” has meant for him.

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