Lansing, Mich. (Michigan News Source) – Some Michigan unemployment claimants will share in $55 million by Michigan’s Unemployment Insurance following a class action lawsuit settlement following the UIA’s handling of some claims during the COVID-19 pandemic.

Claimants filed the lawsuit in the Michigan Court of Claims in January 2022 and argued that they received benefits during the pandemic but then were told they were overpaid and had to pay it back to the agency. The Michigan Court of Claims ruled the UIA to pause collection activities beginning in Dec. 2022 via court order for any claimant who had an overpayment letter who was appealing or protesting the decision.

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The latest decision comes after the UIA turned over $45 million to claimants during the litigation process to those who experienced reduced benefits or after payment by the agency without a proper appeals process.

While the number of lawsuit claimants has not been revealed, the time period usually includes claims for improper collection of unemployment aid from March 2020 through April 2024.

UIA Director weighs in on the case settlement and next steps.

Julia Dale, UIA Director, shared in a statement what the settlement will mean for the UIA and those affected in the case.

“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,” UIA Director Julia Dale said. “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.”

As part of the settlement process, the UIA will cease reinitiating attempts to gather overpayments until protest or appeal rights have been exhausted according to the Labor and Economic Opportunity (LEO) office.

“As part of the litigation process, the Court of Claims ordered the UIA to stop most overpayment collections on claims after March 1, 2020, where a worker may have filed a protest or appeal,” LEO said in a statement. “UIA agreed to put in place remedial actions and reforms before the order pausing collection activity is lifted. The Court will decide when collections resume.”

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Additionally, the UIA is not admitting to liability in the case under the agreement, and workers who join the settlement must agree to release all claims against the agency according to LEO.

Legislators prod UIA for answers following Auditor General Report regarding payments to unqualified individuals.

Last week, Michigan State Representatives questioned UIA Director Dale regarding the Auditor General’s findings that between Jan. 2020 and Oct. 2022, the UIA failed to identify a multitude of claims totaling more than $245 million in potentially improper payments to individuals.

UIA Director Dale reported to the legislators that $90 million has been recovered since the audit and more than a dozen UIA staff have been fired or resigned since July 2020.

Still, Michigan House Representative Mike Harris (R-Waterford) expressed his discontent with the state of the agency.

“Audit after audit has shed light on deep-rooted failures in the unemployment system, which removed safeguards, dropped background checks, mismanaged staffing and software, and doled out massive amounts of fraud,” Rep. Harris said. “It’s time for real accountability and real reform. In the Legislature, we must conduct ongoing oversight, hold feet to the fire, and push for the serious changes that are necessary to fix our broken unemployment agency.”

At the conclusion of the hearing, the Democrat House leadership indicated that it would not host another hearing regarding the audit.