Insurance

Michigan’s unemployment insurance agency acted outside the law

Several Michigan unemployment insurance claimants who received state bills saying they owe money are suing the Michigan Unemployment Insurance Agency and its director Julia Dale.

Attorneys David Blanchard and Frances Hollander of the law firm of Ann Arbor Blanchard & Walker said they filed a 37-page class action lawsuit in the Michigan Court of Claims on Friday, saying the agency acted outside of the law by determining that the claimants were not eligible for benefits more than a year after the benefits were paid.

“The agency is clearly not following its own law, it is acting without jurisdiction and acting beyond any statutory authority it has,” Blanchard said in an interview with the Detroit Free Press.

Nick Assendelft, spokesman for the Michigan unemployment insurance agency, did not immediately comment on Friday evening. John Nevin, spokesman for the Michigan Court of Claims, said he has not seen the lawsuit and may not be recorded until Monday.

Blanchard and Hollander are representing plaintiffs Kellie Saunders, Erik Varga, Lisa Shephard, Dawn Davis and Jennifer Larke, all of whom are Michigan residents who have been assessed with “overpayments” and billed by the state for thousands of dollars .

For example, Saunders, a wedding and event photographer, applied for benefits early in the pandemic, and the agency determined she was entitled to $362 in weekly benefits in April 2020, according to the lawsuit. In October 2021, the agency issued a “notice of reconsideration” and said she should have been paid $160 instead. Saunders learned she had been overpaid $14,000.

Another plaintiff, Varga, who worked in the hospitality industry and was laid off at the start of the pandemic, learned a year ago that the agency was seeking $17,000 in benefits and his federal tax refund on income would be withheld, the lawsuit mentioned. He protested and despite his ongoing protest, his 2020 federal tax refund was seized. He continues to receive notices of overpayment and garnishment, although his protest is still under review.

The lawsuit said the agency violated the due process rights of Michigan residents granted under the state constitution by:

  • Engaging in collection activity, which includes garnishing tax refunds, garnishing wages, or withholding future benefits, based on “monetary determinations” issued more than one year after benefits were paid, which is a violation of Michigan’s job security law.
  • Seek to recover overpayments that need to be reversed.
  • Engage in collection activity without any final decision on the merits.

“Those who are just recovering from financial hardship face illegal garnishment of wages and tax returns without any legal basis,” the lawsuit states.

Blanchard said he had seen other instances of early collection activity from the agency, as claimants were still appealing or protesting an agency decision, but added, “This comes to reach an outrageous level.

“What’s different now is you can’t get an audience for over a year,” he said.

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At a joint Michigan House-Senate Oversight Committee hearing in Lansing earlier this month, Dale said she hoped to provide advice claimants who have been retroactively deemed ineligible for benefits and who must repay by the end of January.

Asked by the Detroit Free Press earlier this week about the status of waivers or options to suspend collections for claimants who have been told they have been overpaid, Assendelft said: “We are still working on the next steps and aiming for the end of this month for a final decision on how we will proceed.”

Plaintiffs seek monetary damages, preliminary and permanent injunction, stay of garnishment and wage garnishment, and declaratory relief, which would compel the agency to comply with its legal and constitutional obligation to issue reviews within one year of the initial decision.

Contact Adrienne Roberts: [email protected]