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Michigan’s Ineffective Unemployment System Is Nothing New

The coronavirus pandemic has thrown thousands of new applicants into the state’s unemployment system, overwhelming claims processing and phone calls. But these issues have been happening for years.

(TNS) — When Trey Holubec started fighting Michigan’s unemployment system, he was mainly doing so for his own family.

Now, the quiet, laid-back, apolitical maintenance worker at Midwest Water Treatment in Caro is fighting the system for Marlene – an elderly woman he’s never met.

Holubec had never been unemployed before the coronavirus pandemic. He started getting unemployment pay after being laid off, until he was one of the 340,000 Michiganders who had their accounts suspended by the state earlier this month, for fear of fraud.

While Holubec entered the pandemic with an innocent confidence in Michigan’s unemployment system, he’s since had first-hand experience of the Unemployment Insurance Agency’s flaws. Not only did the computer system stop payments for thousands of eligible residents, but the recently-beefed up staffing levels still can’t handle the call volume flooding the agency.

The extent of the current issues at the UIA may be unprecedented, but the problems themselves are nothing new, experts say.

For Holubec, he sent in documents verifying his identity – as a letter from the state UIA demanded. He called the office incessantly – including 1,238 times one day – desperate to get matters resolved.

But it was fruitless.

"I have yet to ever speak to an actual person," Holubec said. "I'm getting frustrated. I have no way to help my wife, my family."

Holubec then tried calling his local Michigan Works office to see if they could help.

“(The woman answering) says to me, ‘Michigan Works?’ She goes, ‘Are you Michigan Works?’ And I was like, ‘Are you with Michigan Works?’”

Instead of connecting with the agency, Holubec was connected with another unemployed person trying to call Michigan Works. Surely it was a one-time glitch, he thought.

So he called again and the same thing happened. And another 13 times.

“I now have 15 new friends because of all of this,” Holubec said.

That's how he met Marlene.

"She broke my heart. It took me five minutes to explain to her that I was not in any way affiliated with the state of Michigan," Holubec said. "She started crying and she said, 'Son, what am I going to do?' I said, 'Ma'am, I don't know what you're going to do. I don't know what I'm going to do.' She said, 'Son, I can't even buy a loaf of bread, right now.'"

After hearing Marlene’s story, he’s vowing not to keep quiet anymore.

Holubec has since met with legislators in Lansing, sharing his story – and Marlene’s – about how the unemployment system’s faulty fraud detection system is crippling Michiganders living paycheck to paycheck.

“It fired me up so bad," Holubec said.

Payment Freezes Without Warning

The latest unemployment headache started June 1, when the state flagged 340,000 accounts for potential fraud. Payments were halted immediately. And without advanced notice.

As of Friday, June 12, 140,000 of the accounts have been restored with payments beginning to flow back in. For thousands of others, their accounts sit in limbo as their bills pile up.

The UIA doesn’t know what percentage of the 340,000 are actually fraudulent, said spokesman Jason Moon.

The U.S. Secret Service issued a national alert in May, saying an international criminal ring was exploiting states for unemployment dollars, per a state news release. The U.S. Department of Labor estimated the nation would lose $26 billion due to unemployment fraud during the COVID-19 pandemic.

Michigan responded by adding new fraud protections to its system. That flagged and shut down the 340,000 accounts.

The state’s UIA typically has 12 people on its fraud team, Moon said. Now it has 600 employees working to verify these potentially fraudulent accounts, with 200 more in training to join later.

The agency is also bringing on a “national forensic accounting firm” to speed up the process of figuring out which accounts are legitimate, Moon said.

"It’s extremely upsetting that the actions of these fraudsters have delayed payments meant for our working families,” UIA Director Steve Gray said in a news release. “While we continue to work with our state and federal partners to stop this unlawful activity, our focus remains on doing everything we can to quickly validate authentic claims and get our workers the emergency financial assistance they need.”

What specifically raised red flags about these 340,000 accounts? The UIA isn’t saying.

“We cannot speak in detail publicly about our fraud prevention program, as this information is frequently used by criminal impostors to devise new strategies,” Moon said.

The 340,000 people were sent letters explaining the issue and how to resolve it. The UIA declined to respond which steps they’re asking people to take – however MLive acquired a copy of the letter.

The letter asks people to send identification verification by providing either a passport or a permanent resident card/alien registration receipt card. The other option is to provide a driver's license/ID card and a social security card/birth certificate copy.

The letter says the identification can be done via mail, fax or in person. It’s worth noting all UIA offices are closed to the public because of COVID-19, however – so submitting in person isn’t a choice right now.

“I get that there’s a lot of people that they have to comb through," said Grand Valley State University student Shelby Spangler, whose summer internship was canceled for the pandemic and also had her UIA payments halted. "But you’d think they’d have a system set up.”

Some Michiganders sent in these verifications right away – and through multiple channels – and still haven’t heard back from the UIA.

And not for a lack of effort.

“I have called unemployment over 1,000 times,” said Takiya Blair, who lives in Albion and was laid off from her state of Michigan job as a payments worker, approving people for things like food stamps and Medicaid.

Blair’s husband has end-stage renal disease, is on dialysis and is on the transplant list. Blair and her kids are on Medicaid, but her husband isn’t eligible. Which means nearly all of her income is going toward his medication.

Just one of the medications – to be taken three times a day – costs $700 to refill, Blair said. She’s not sure how she’ll make ends meet if she doesn’t get her unemployment payment soon, she said.

“They’re going to go after the people that did fraud anyway. They’re going to get their money,” Blair said. “Why did they turn it off, especially knowing that there are parents out here that need it for their children?”

Attempting to call the UIA has become a daily routine for Blair. She starts at 7:58 a.m. and keeps calling for two hours. Sometimes her husband and kids make calls with her.

It’s the same story for Todd, a laid-off Oakland County metal fabrication worker who declined to share his last name. He has memorized the sequence of numbers to key in, to supposedly reach a human being.

“'Nine' to bypass whatever the first stupid message is, then ‘one’ for English, and then ‘one’ for account, then ‘four’ to talk to somebody,” Todd said. “That’s the sequence.”

Chats on the unemployment website and emails aren’t any more successful. It’s impossible to reach a person and there’s no projection of when payments might restart, Holubec said.

“Am I going to get approved or is my family going to be out in the cold?” Holubec said. “I just wanted to talk to somebody.”

Problems with unemployment? Nothing new, for Michigan

Issues with Michigan's unemployment system existed long before COVID-19 came along, said Rachel Kohl, director of the Workers' Rights Clinic at the University of Michigan and an assistant law professor at the school.

Problems began in 2013 when Michigan implemented the Michigan Integrated Data Automated System – known as MiDAS. The system allowed a computer to decide when somebody had committed unemployment fraud, instead of a human.

It spurred what Kohl calls Michigan’s “false fraud scandal.”

MiDAS falsely accused more than 40,000 Michiganders of having fraudulent unemployment claims – and the financial penalties still haven’t been rectified for thousands of victims still today, said Jennifer Lord, the plaintiffs’ attorney in a lawsuit against the state on the issue.

In cases handled solely by the computer, MiDAS had a 93 percent error rate in determining fraud.

The state garnished peoples’ wages – once they were back to work – and took their tax refunds. There was no way for people to appeal or challenge it, Lord said. The only notification people received was a note on their online unemployment account and many people didn’t think to check the site once they were back employed, Lord said.

The case is back in the Michigan Supreme Court and Lord said she's hoping for a favorable decision "any day now."

The false fraud scandal was exposed by Steve Gray – who has since been hired by the state to become the UIA director.

"The only reason I have any faith at all in the agency whatsoever is, the person who exposed the agency's past bad action, Steve Gray, is at the helm," Kohl said.

For now, the UIA isn't taking action on people who ignore the "stop payment" indicator on their account, Moon said.

The MiDAS nightmare has brought some positive changes, Lord said. For example, MiDAS isn’t automated to garnish wages or seize tax funds – like before – and the hefty penalties put on people who received payments in error have been trimmed.

Unemployment Disorganization Exposed

Reaching the UIA on the phone was tough enough pre-pandemic, Kohl said.

A 2016 state audit found the UIA didn’t answer 89 percent of its calls.

"And that's when the agency was only getting 5,000 to 7,000 calls per day," Kohl said. "Now during COVID, they're getting 200,000 calls per day."

Michigan’s unemployment rate topped 22 percent in April, as 2.2 million residents have filed since the pandemic began. About 500,000 haven’t received a single payment yet – and that doesn’t include the 340,000 who just had their payments halted.

The pandemic holds up a magnifying glass to MiDAS' faulty programming, Kohl said.

"This COVID-19 crisis shines a bright light on just how inadequate Michigan's UI system has become, due to both legislative inaction and the enactment of outright bad policy," said Peter Ruark, senior policy analyst for the Michigan League of Public Policy.

How can Michigan fix its unemployment system? There are plenty of suggestions.

Michigan House and Senate bills up for discussion include increasing the amount of time somebody can be on unemployment from 20 weeks back to 26 weeks and changing the maximum weekly benefit from $362 per week to 58 percent of the average weekly wage.

When the $362 limit was set in 2002, that was equal to 51 percent of the average weekly wage in Michigan, Ruark said. Because of inflation, it’s now equivalent to 35 percent, he said.

The state should also make the system more user friendly and be required to publish its MiDAS formulas and have experts review them regularly, Kohl said.

For the immediate crisis, Lord recommends hiring as many bodies for the unemployment office as possible and keeping the phones staffed 24/7.

Unlike the initial MiDAS scandal, the current dilemma doesn’t likely have a legal remedy, Lord said. Still, her office has been getting hundreds of calls from people desperate to get help from a human voice.

“Our receptionist is distraught because people call and they’re sobbing on the phone to her,” Lord said. “Their electricity is going to be turned off and they don’t know where they’re going to find money for their load of groceries.”

Some legislators have called out the system, like State Rep. Yousef Rabhi, D-Ann Arbor, who said, “These are peoples’ lives that are on the line … We cannot have this ever happen again,” in a recent conference call about the issue.

The system could be overhauled down the line. But for now, the 600 UIA employees designated to the issue are the only ones who can help to the laid-off workers praying to see their bank account replenish.

On Tuesday, June 16, Holubec was relieved to see just that. After two weeks of limbo, his financial fears were put at ease, with the payments dropping into his account.

But the unemployment office hasn’t heard the last of him.

“This has turned a quiet, laid-back person like myself into a vocal person for not just my rights, but for the 15 people (I spoke with on the phone) and for Marlene, who can’t buy that loaf of bread,” Holubec said. “So I won’t be quiet anymore.”

©2020, Walker, Mich. Distributed by Tribune Content Agency, LLC.

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