$55M settlement against state unemployment agency given preliminary approval
Susan J. Demas
Preliminary approval has been reached in the settlement of a class action lawsuit against the Michigan Unemployment Insurance Agency (UIA).
The $55 million settlement, which still needs legislative approval, would reimburse workers who said the agency ordered them to pay back pandemic-era jobless benefits before resolving a protest or appeal. The Michigan Court of Claims on Thursday approved the preliminary settlement in Saunders v Unemployment Ins. Agency et al..
“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,” said UIA Director Julia Dale, the agency’s 11th director in as many years. “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.”
While the total number of claimants has yet to be determined, they would be among those whose unemployment aid was subject to improper collection from March 1, 2020, through April 2024. A claims administrator will determine which workers would qualify for payments.
Under the settlement agreement, UIA will refrain from reinitiating attempts to collect overpayments until protest or appeal rights have been exhausted. The agency will also implement a process for workers to seek waivers.
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. 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.
Under the agreement, UIA is not admitting to liability in the case. Workers who join the settlement must also agree to release all claims against the UIA.
This is not the first legal settlement involving errors by the UIA’s computer system. In January, a Court of Claims judge gave final approval to a $20 million settlement for those who the Michigan’s Integrated Data Automated System (MiDAS) automatically accused of fraud between 2013 and 2015, during the administration of then-Gov. Rick Snyder.
In announcing the preliminary approval in the latest settlement, the Department of Labor and Economic Opportunity (LEO) noted that since her appointment in 2021, Dale has initiated several improvements including expanding an advocacy program that provides free legal advice to workers and employers who appeal UIA determinations and implementing a process that will result in a new computer system in 2025 that officials say will speed claims processing, while building on what were described as the agency’s “aggressive anti-fraud tactics.”
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