Judge: Michigan Unemployment Insurance Agency Can’t Collect on Appealed Unemployment Overpayments

by Scott McClallen


A Michigan Court of Claims judge ruled that the state Unemployment Insurance Agency can’t collect on claimants appealing a determination they were overpaid.

Court of Claims Judge Brock Swartzle ruled that his prior preliminary injunction stops UIA collection on all individuals who “timely” appeal UIA claims until they are resolved.

“Putative class members will likely suffer irreparable harm to their constitutional right to due process if defendants seek repayment of unemployment benefits from them before completing the administrative-review process,” Swartzle wrote.

The Detroit News first reported the story.

A class-action lawsuit claimed the UIA violated Michiganders’ constitutional right to due process by collecting on accounts before an appeal ruling.

The UIA said that federal rules require they collect overpayments, but Swartzle noted that those are for cases with final rulings, not ones under appeal.

“… Even setting aside the observation an executive branch agency has no legal authority to violate anyone’s constitutional right to due process, defendants have already been ordered in a separate federal lawsuit to suspend collection activities until a determination becomes final,” Swartzle said.

Swartzle wrote that if the U.S. Department of Labor questions whether the preliminary injunction violates federal law, then the UIA can move for more clarification at that time.

UIA spokesman Nick Assendelft said that Attorney General Dana Nessel’s office and the UIA are reviewing the ruling.

Assendelft said that UIA Director Julia Dale “secured the U.S. Department of Labor suspension on overpayment collections for nearly 400,000 Michigan workers, which provides relief to claimants while UIA processes future overpayment waivers above and beyond the more than 62,000 approved so far this year.”

Assendelft said the UIA and AG’s office have collaborated to reduce fraud and that Dale has helped rebuild the UI Trust Fund to $1.5 billion since 2021.

“The collections suspension and overpayment waivers are cornerstones of Director Dale’s transformation of the UIA, which includes chasing down bad actors who steal money from workers, striving for exemplary customer service, and leading the effort to replace the Agency’s decade-old computer system with a user-friendly, state-of-the-art interface for claimants and businesses,” Assendelft said in a statement. “A new system will allow for quick analysis of data that is currently not possible for the agency.”

The UIA has forgiven $484.2 million on 62,200 claims thus far this year and has waived more than $4.35 billion from more than 407,300 claims since July 2021.

– – –

Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.


Related posts