Michigan House OKs unemployment changes after fraud scandal

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LANSING, Mich. (AP) — The Michigan House on Wednesday unanimously approved bipartisan legislation that would cut high financial penalties for collecting excessive unemployment benefits while easing the ability for employers and claimants to report cases of identity theft and other issues.

The eight bills were proposed in the wake of a scandal at the state Unemployment Insurance Agency, which has reversed at least 44,000 fraud cases covering a two-year period after a computer system wrongly accused people of fraudulently receiving benefits. Some claimants were unaware of the allegations.

“I am confident this bill package includes viable reforms that not only solve the current issues of the UIA, but also will help the agency moving forward,” said a sponsor, Republican Rep. Joseph Graves of Genesee County’s Argentine Township.

A law enacted earlier this year prevents the agency from adjudicating a claimant’s case as fraud without human verification and reduces the statute of limitations so it can pursue fraud three years back instead of six. But lawmakers want other changes and Republican Gov. Rick Snyder’s administration is supportive of the legislation that was sent to the Senate for consideration.

In many cases between 2013 and 2015, claimants did not commit fraud and — to compound being forced to pay restitution — were hit with interest along with penalties above the overpayment. Under the legislation, first-time offenders who receive an overpayment under $500 would have to pay it back instead of being required to refund the overpayment plus a penalty equal to four times the amount that was improperly obtained. Large fines would stay in place for “impostor” claimants.

Under the bills, a mechanism would be created so that employers and past employees could address claims filed by impostors. People accused of fraud could qualify for help from an advocacy program. And people filing for benefits would have to give additional proof of identity.

“These were innocent people often forced into bankruptcy at an already vulnerable time in their lives,” said Rep. Terry Sabo of Muskegon. “We have a responsibility now to right that wrong, and so House Democrats will continue working for legislation that makes these families whole again.”

The Michigan Manufacturers Association welcomed the House action, saying “strong reforms” are needed to curb a proliferation of impostor claims for jobless benefits.

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