Report shows Michigan's unemployment agency paid $8.5 billion in fraudulent claims

Unemployment benefits claim
Photo credit Getty Images

(WWJ) – A new report released Wednesday estimates Michigan’s Unemployment Insurance Agency paid out around $8.5 billion in fraudulent claims – far more than previously estimated – since the start of the COVID-19 pandemic in March 2020.

The 12-page report, prepared by Deloitte, found between March 1, 2020 and the end of Sept. 2021, as much as $2.8 billion was paid to claims involving likely imposter fraud. The report also says an estimated $5.7 billion was paid to claims involving likely intentional misrepresentation fraud.

Most of the money – about 97% of it – was paid through federal pandemic assistance programs and not state dollars, the report said.

Since the start of the pandemic, the report says the agency has paid a total of $39 billion in unemployment assistance to more than 3 million Michiganders. An estimated $32 billion of that money was paid through federal programs

The figures reported Wednesday come more than a year after the agency expected fraud losses in the "hundreds of millions" of dollars.

State officials also noted on Wednesday the UIA also avoided paying an estimated $43.7 billion in fraudulent claims during the same time period. Officials say anti-fraud measures have brought fraud rates way down since last year.

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New UIA Director Julia Dale said she is outraged and frustrated by all the fraud, but progress is being made.

“Our diligence in identifying fraudulent claims proves that we now have effective processes to identify criminals who steal benefits from unemployed workers and Michigan taxpayers,” Dale said. “We will use all the sophisticated tools available to us – and pursue new opportunities and partnerships – to continue aggressively fighting unemployment insurance fraud.”

Gov. Gretchen Whitmer on Wednesday also signed an executive order Wednesday establishing the Unemployment Insurance Fraud Response Team, which “solidifies the coordination among state departments and law enforcement partners to identify, investigate and prosecute individuals who steal jobless benefits intended for Michigan workers.”

Whitmer also issued an executive directive that will allow the UIA to continue to use new technologies, integrate stakeholder expertise, partner with community organizations to educate potential claimants and prioritize enforcement of fraud cases.

“It’s extremely important that we continue to push back on bad actors who look to take advantage of a vital safety net resource for out-of-work Michiganders,” Whitmer said. “While we are seeing increased success in identifying and stopping fraudulent claims, we cannot let up. We owe it to workers to make sure this jobs resource is available when they need it the most. Today’s action ensures the Unemployment Insurance Fraud Response Team continues to have the expertise and tools necessary to ramp up our efforts to prevent bad actors from defrauding the system.”

Last November a report from Deloitte documented steps the UIA had taken to combat fraud, including detecting anomalies to identify questionable claims for additional review using the agency’s Fraud Manager software and other tools.

The state says many of those and subsequent anti-fraud measures are “solidified” in Whitmer’s latest directives.

In addition, the UIA says it will modernize its current IT system and launch an “aggressive staff training regimen,” among other measures.

Featured Image Photo Credit: Getty Images