Lawsuit filed against State’s unemployment insurance system

Users say computer system erroneously accuses them of fraud and then fines them, in one case as much as $20,000

DETROIT — A group of Michigan citizens has sued the Michigan unemployment insurance system to stop its illegal and unconstitutional practices. In a federal lawsuit filed Tuesday in the U.S. District Court for the Eastern District of Michigan, the plaintiffs allege that the State’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 State’s widespread practice of deciding cases involving serious accusations of fraud through a computer program lacking any human oversight. Under the Unemployment Insurance 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. In one case, the fine was as much as $20,000.

“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,” said attorney David Blanchard of the Ann Arbor civil rights firm Nacht, Roumel, Salvatore, Blanchard and Walker, P.C.

The plaintiffs 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.

They are joined in their lawsuit by the UAW and the Sugar Law Center for Social and Economic Justice. The Sugar Law Center is a non-profit public interest legal organization headquartered in Detroit, providing legal representation to unemployed workers on fraud and restitution claims.

FOR MEDIA INQUIRIES ONLY, CONTACT SANDRA DAVIS, sdavis@uaw.net, (313) 926-5291.

ALL OTHER INQUIRIES, CONTACT JOSEPH X. MICHAELS, NACHT LAW FIRM, (734) 663-7550. Say the UAW referred you regarding the state unemployent insurance lawsuit.

(Photo Credit: Mitchell Trinka)