Nacht Law has filed suit on behalf of a group of Michigan citizens to stop the Michigan Unemployment Insurance Agency’s illegal and unconstitutional practices. In a federal lawsuit filed on April 21, 2015, the plaintiffs allege that the Agency’s practices have deprived them, and thousands of Michigan’s unemployment insurance claimants, of their fundamental rights under the Constitution and under the Social Security Act.
The suit challenges the Agency’s widespread practice of deciding cases involving serious accusations of fraud through a computer program lacking any human oversight. Under the Agency’s recently instituted “robo-adjudication” system, the Agency regularly accuses people who have filed for unemployment benefits of fraud based on routine discrepancies in the Agency’s information. This has resulted in potentially thousands of Michigan’s unemployed citizens being accused of fraud and assessed onerous financial penalties, despite the fact that they did absolutely nothing wrong.
Under the robo-adjudication system, if any discrepancy is found between the information reported by a claimant and a former employer, the system flags the claimant’s file as potentially fraudulent. Once this occurs, there often is no meaningful way for a claimant to respond to the Agency’s allegation of fraud. This results in the levying of a penalty equal to five times the benefits received. These punitive assessments regularly total $10,000-$50,000, and sometimes more.
The individual plaintiffs in the lawsuit are seven former unemployment insurance claimants. Each of the plaintiffs was qualified for unemployment benefits, but was erroneously accused of fraud by the Agency. Some even have had their wages garnished and tax returns taken, costing them thousands of dollars. Plaintiffs include: a nursing assistant who was accused of fraud and assessed $20,000 in penalties after she became pregnant and no longer could work but whose employer mischaracterized the reason for her separation to the Agency; and an electrician who was accused of fraud solely because of an obvious administrative error by the Agency.
They are joined in their lawsuit by the UAW and the Sugar Law Center for Social and Economic Justice. The UAW seeks to protect the constitutional rights of its claimant-members and to advance the interests of other claimants through the litigation of this case. The Sugar Law Center is a nonprofit, public interest legal organization headquartered in Detroit, which provides legal representation to unemployed workers on fraud and restitution claims. The Agency’s system places a substantial administrative burden on the activities of Sugar Law and the rights of their clients.
Nacht Law’s David Blanchard, the lead attorney on the case, said:
“The stories of the individual plaintiffs demonstrate a systematic and widespread practice of automatically accusing Michigan’s unemployed of criminal fraud – assessing penalties and sometimes seizing property without the benefit of a hearing, and without any probable cause to support the allegation. The United Auto Workers Union and the Sugar Law Center should be applauded for pursuing the rights of these individuals and many other eligible beneficiaries like them. Nobody should be accused of fraud after honestly applying for benefits he or she is entitled to; applicants for unemployment benefits are regularly swept up in an administrative nightmare. They deserve to know that they are not alone, that it is not simply an oddball administrative mistake but rather a systematic and computer-programmed accusation of fraud brought on through no fault of their own”.
For information or questions regarding this post readers can contact the author David Nacht.