by Scott McClallen
The Michigan Unemployment Insurance Agency wants taxpayers to foot its $55 million settlement for improperly taking money.
The agency said Tuesday it will seek Legislative approval of $55 million for a settlement fund related to Saunders v Unemployment Ins. Agency et al. on April 25.
Agency Director Julia Dale welcomed the settlement.
“This settlement agreement lets us focus staff and resources on customer service and the reforms we are making at the Unemployment Insurance Agency to benefit Michigan workers and employers alike,” Dale (pictured above) said in a statement. “Throughout this legal process, the parties worked cooperatively with each other and the court to establish new processes and procedures so Michigan residents won’t find themselves in a similar situation in the future.”
Court of Claims Judge Brock Swartzle gave preliminary approval to the settlement that suspended $4 billion in collections over 15 months.
The settlement class includes claimants subject to improper collection on any unemployment insurance claim filed from March 1, 2020, through April 17, 2024.
The litigation brought by attorney David Blanchard discovered a backlog of “hundreds of thousands” of potential unprocessed protests and appeals.
Since collection was halted, the lawsuit says the agency has returned more than $45 million in “improperly collected funds.”
The settlement agreement will provide $5 million to compensate members whose money hasn’t been returned or who “suffered a demonstrated hardship as a result of improper collection.”
If approved, the settlement will have generated over $100 million in direct relief for Michigan claimants.
The agency also agreed to set aside $1.6 million for nonprofit legal aid for claimants.
The government’s mistake followed chaos in the jobless agency after Gov. Gretchen Whitmer shuttered much of the state’s economy via executive order in spring 2020 when COVID-19 struck.
Fraudsters and real claimants thrown out of work filed more than 388,000 claims in one week – 77 times more than an average pre-pandemic week – overwhelming the system. The agency approved a majority of the claims, including many fraudulent ones.
Some agency employees were committing unemployment fraud, and in some cases, the agency failed to perform background checks on new hires.
Michigan estimated it paid out $8.5 billion of unemployment fraud but Haywood Talcove, the CEO of LexisNexis Risk Solutions’ Government Group, said the number was closer to $11 billion.
A final hearing is scheduled for March 20, 2025.
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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. In 2021, he published a book on technology and privacy. He co-hosts the weekly Michigan in Focus podcast.
