Michigan Unemployment Compensation Law Suits Two separate suits originally filed in 2015 Zynda, et. al. v. Arewood and Moffet – Massey (in their official capacities) (No. 2-15-cv-11449 U.S. Dist. Ct., E.D. Michigan.) Bauserman, et al. v. State of Michigan Unemployment Insurance Agency, (Michigan Court of Claims, Case no. 2015 000202-MM) (Class Action) Both Suits challenge the manner in which Michigan implemented an automated fraud overpayment detection and adjudication system aptly nicknamed “MiDAS”

Both suits attack the MiDAS system as one where an automated/robo system is able to review files, create fraud overpayments, sizeable (4X) penalties, income tax intercepts, wage garnishment, bank account levies and interest to create substantial debts for claimants without human review, based upon a cursory service process. Thus, claimants often have a “bill” without ever knowing there was a problem or what it was.

MiDAS became operational in 2013 MiDAS became operational in 2013. It included a read back feature that allowed it to search files back to 2009. It would review all claim files and note differences between claimant and employer statements, assume misrepresentation or fraud solely by the claimant and go forward with a fraud overpayment determination. Service of fraud notices by MiDAS/Michigan is at issue. Michigan would send notices to claimant’s state email account addresses (claimants often did not consult that account once they received all benefits) and old street addresses when mail was used. Many claimants did not know of actions being taken by Michigan until tax refunds were intercepted, wages garnished or accounts levied. Appeal times had expired and claimants would have to seek discretionary leave to file any sort of appeal.

A Michigan academic and the head of the Michigan Unemployment Insurance Project wrote a lengthy memorandum to Gay Gilbert at USDOL in May 2015 decrying the automated system and asking her to investigate it. Zynda relies on the U.S. Constitution, Social Security Act and the Michigan Constitution. Seeks Declaratory and Injunctive Relief, reopening of cases, individual review hearings and attorney fees.

Bauserman relies on Michigan State law, the Social Security Act, the Michigan Unemployment Insurance law. Seeks Declaratory and Injunctive relief and damages in the form of the return of all monies paid for unemployment “debts” and monies paid due to improper collection methods.

Michigan filed Motions to Dismiss in both cases citing UIPL 01-16 and Michigan’s abandonment of the robo system to one acceptable under the UIPL. Both dismissal motions were denied. Zynda is presently waiting for the federal Judge to open discovery. In Bauserman, the denial of the Motion to Dismiss is on appeal to the Michigan Court of Appeals and the plaintiffs’ attorney estimates it will take a year for the appeal to be decided. michael.milwee@hotmail.com