Advocacy News – January 4, 2021
A new Deloitte report released last week estimates that Michigan paid up to $8.5 billion in fraudulent jobless claims during the pandemic.
The report found that Michigan’s Unemployment Insurance Agency (UIA) paid an estimated $8.4 to $8.51 billion in potentially fraudulent unemployment insurance (UI) claims from March 1, 2020, to Sept. 30, 2021. Of that amount, $2.7 to $2.8 billion was paid to claims involving likely imposter fraud (i.e., claims involving stolen identities) and an estimated $5.6 to $5.7 billion was paid to claims involving likely intentional misrepresentation fraud (e.g., claims involving false statements or documents). Although the bulk of payments were federally funded, it is estimated that 2.9 percent of the fraudulent payments came from the employer-financed UI Trust Fund.
This audit comes on a heels of an early December Michigan Auditor General report, which found the UIA improperly paid $3.9 billion in benefits to 347,437 claimants now classified as ineligible due to a state error in eligibility criteria. The UIA has said they believe a portion of that $3.9 billion overlaps with the intentional misrepresentation number in the Deloitte audit but the exact amount remains unclear.
The agency has paid a total of $39 billion in unemployment aid to 3.4 million Michigan residents since March 2020 so these fraud losses account for more than 20% of pandemic payments, a staggering and unacceptable number.
As demonstrated by the Deloitte audit and Auditor General’s report, the state has made many serious mistakes and errors in handling claims during the pandemic. The Michigan Chamber will continue to voice its support for better accountability of the UIA and changes to ensure not a dime of these fraudulent benefits are passed onto Michigan employers.
Specifically, the Chamber will continue the Michigan House to take action on House Bill 5528, which would prohibit the state from charging the cost of improper and fraudulent benefits to the UI Trust Fund, the 100 percent employer-financed fund that pays benefits to claimants.
Please contact Wendy Block with questions at wblock@michamber.com.