After Outrage, the Michigan Unemployment Agency Reverses Controversial Directive

Mark Mandell, Esq.

After a harsh grilling of the Michigan Unemployment Agency’s director by a Senate committee last week, the agency has rescinded a controversial directive made in October regarding the handling of fraud cases.

The October directive at issue told agency officials not to show up for administrative hearings for unemployment insurance fraud cases unless the amount of fraudulently claimed benefits was at least $15,000. However, the directive ran contrary to the 2011 law passed by the legislature that makes unemployment insurance fraud above $3,500 a potential felony. As a result, lawmakers were outraged.

“Do you make it a habit of interpreting legislation for your own convenience?” Sen. Jack Brandenburg, R-Harrison Township, asked UI Agency Director Steve Arwood. “You changed the legislation’s intent; don’t tell me you didn’t.”

Arwood stated that he only signed off on the directive as a “temporary measure” due to staff shortages after the UI Agency laid off 400 of its 1,200 employees at the beginning of October.

When agency officials do not appear for the fraud hearing, the judge finds that the state has abandoned its fraud claim and tosses out the case. While it may be convenient for the UI Agency to ignore smaller claims, such fraudulent claims cost both employers and workers through higher insurance rates.

A new directive was sent out last Friday that referred agency officials to the fraud manual, which specifically states that attendance at civil fraud hearings before administrative law judges is necessary if the amount in question is $3,500 or more.

It seems the UI Agency is back in line with the law.

To learn more and read the original article, please visit: http://www.freep.com/article/20130417/NEWS06/304160180/Unemployment-Insurance-Agency-pivots-controversial-fraud-policy