J.J. Conway Law
Years ago, I was in the 36th District Court in Detroit during a jam-packed hearing over the issuance of hundreds of improper parking tickets. Apparently, the city had changed its rules for permissible parking spots and then began enforcing the changes before the signs announcing the changes went up. The city’s parking enforcement department began issuing hundreds of tickets, and the fines were stiff. So, you had a situation where there was little (or no) notice of a rule compounded with a heavy fine. Understandably, this was frustrating and likely a little jarring for those ticketed, as was soon apparent.
As the magistrate began cycling through the claims, the same basic fact emerged: the city screwed up this parking situation. People were heated, and they were becoming louder and more vocal as they rose to address the court. Soon, the gallery began to participate in the hearings with cheers and clapping as each speaker pled their case. Then, a guy approached the podium wearing one of those “Cat in the Hat” style oversized hats. His hat was bouncing around as he read aloud about due process from a pocket copy of the U.S. Constitution, alternating between addressing the court and those of us in the gallery. Finally, the magistrate had had enough. She banged her gavel and polled the crowd:
How many of the group were willing to have their tickets dismissed for five bucks?
All the hands went up. The arguments stopped. A clerk came out, sat down in front of the bench, collected the five-dollar bills, and the tickets were stamped paid and dismissed. It was swift justice and solved a problem that was quickly becoming – at least in the magistrate’s eyes that day– unmanageable.
I have been replaying that scene over again as I think about Michigan’s troubled Unemployment Insurance Agency.
The UIA was put to the ultimate agency test – COVID-19. And, perhaps unsurprisingly, Michigan’s sudden, mass, compulsory unemployment tripped the UIA’s circuit breaker. The overwhelming number of claims combined with the complexity of trying to pay out both state and federal benefits was an immense task, and there should be room for patience and understanding. But we are now nearly three years from that first jolt, and the UIA is still in recovery mode. Time to bang the gavel?
The UIA has been the one state agency that has seemed to be aggressively (at times, blindly) policing suspected waste, fraud, and abuse among Michigan’s unemployed workers. Undeniably, the pandemic did bring out bad actors and scam artists. Yet, the UIA’s near obsessive pursuit of those culprits have put so many innocent residents through unnecessary anxiety and expense.
The UIA’s systemic approach of putting its claimants through a Kafkaesque loop of notices, determinations, and redeterminations is unjust and unfair. The UIA routinely and reflexively issues eye-popping demands for repayment from average workers threatening crushing debts that they do not owe under the law.
For the past two years, many have received improper notices from the UIA alleging that unemployment benefits paid during the raging of the pandemic are being disallowed retrospectively. Claimants receive itemized statements seeking tens of thousands of dollars. The process is both startling and frustrating.
To compound matters, there appears to be no reliable helpline or other place to find quick relief. There are confusing and contradictory deadlines. Depending on the reviewing agent who receives a protest or appeal, the UIA’s preliminary determinations can vary widely. Some claimants see demands for tens of thousands of dollars be reduced to near-zero without any meaningful explanation. If an appeal is filed in a portal, there is one result, if the appeal is filed by fax, there is another result, and by mail, there is yet a third result.
The UIA’s own internal troubles have made news. In November 2020, UIA Director Steven Gray resigned. Then, an acting director of the UIA was installed. In October 2021, Gov. Whitmer appointed Ms. Julia Dale. In addition to three different directors in eleven months, the agency has been hit with multiple class action lawsuits. In October 2022, the UIA announced it had settled a $20 million class action lawsuit for falsely alleging fraud against innocent claimants. The department has all but lost its governmental immunity because of its claims handling process. So, complaints of mismanagement by the agency are not idle.
The UIA is a critical part of the safety net. It has a real and important purpose in the lives of Michigan workers with rock solid policy justifications underlying its existence. It needs to hit the reset button. Perhaps, it needs to rethink its entire approach and just start over fresh in the new year. It may be time to bang the gavel like the Magistrate in the parking ticket case and consider:
• Dismissing its repayment demands that stem from the pandemic, close those files that arose during the National Emergency Order, and focus on the agency’s future. With near-full employment, but the possibility of layoffs coming, this would be the ideal time to do this.
• Hire well-qualified representatives to assist UIA claimants competently and quickly with a resolution of their problems using correct and consistent information.
• Train or hire specialists that can better address the claims of seasonal workers and schoolteachers whose payroll processes have distinctive features and whose claims for legitimate benefits may be the result of being paid over extended pay periods for work already performed.
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John Joseph (J.J.) Conway is an employee benefits and ERISA attorney and founder of J.J. Conway Law in Royal Oak.
