LANSING, MICH. - Michigan's administrative law judges were among the first to sound the alarm about a $47-million automated system that falsely accused tens of thousands of unemployment insurance claimants of fraud.
Records obtained by the Free Press show that managers at the Michigan Unemployment Insurance Agency complained repeatedly to a top official of the Michigan Administrative Hearing System, who, in turn, pressured administrative law judges who were too critical of the agency and its automated system, called MiDAS (Michigan Integrated Data Automated System).
One judge complained he was placed on an Unemployment Insurance Agency "hit list" and then banned from hearing fraud cases, records show. In another instance, a UI Agency attorney complained to an agency director about a judge who strongly criticized MiDAS and asked that "appropriate action" be taken against the judge.
The e-mails and judges' written decisions — some obtained under the Michigan Freedom of Information Act and others from a state government insider — raise concerns about interference in the hearing system and the independence of the state's administrative law judges.
The records also suggest that top officials in the UI Agency and the Michigan Administrative Hearing System were more concerned about tamping down public criticism of MiDAS than fixing the system that was generating unwarranted wage garnishments and seizures of income tax refunds, as well as causing financial ruin for former claimants. MiDAS continued to be used without human oversight, spitting out thousands more false fraud accusations for more than a year after judges first blasted the system.
Top officials at the Michigan Administrative Hearing System, interviewed Thursday, denied being more concerned about how judges treated UI Agency officials than about the fate of jobless claimants wronged by the MiDAS system.
They said a few judges went too far by calling the fraud charges "baseless" or "garbage" at hearings, and in some cases advising jobless claimants who were falsely accused of fraud that they could join a class action against the state.
"There was no 'hit list,'" said Julie McMurtry, a division director in MAHS, which is an independent agency inside the Department of Licensing and Regulatory Affairs (LARA).
Wanda Stokes, who was a deputy director at LARA with oversight of the administrative hearing system until Gov. Rick Snyder named her director of the Talent Investment Agency, which oversees the UI Agency, in July 2016, did not respond to an e-mailed question about whether the agency had assembled a list of judges it did not want hearing fraud cases.
But Stokes confirmed there was coordination between her new and former agencies.
“I was aware of some of the disputes between UIA staff and some of the administrative law judges, and that there were some efforts for the two staffs to work more productively and focus on our shared mission of helping the people of Michigan," Stokes said in an e-mailed statement.
The administrative law judges, who were advised in e-mails not to speak to the media without first checking with state managers, are part of the executive branch of state government but operate much like their counterparts in the judicial branch. Many of them spoke out at hearings and in written decisions after receiving appeals from citizens accused of fraud and determining that the computer-generated accusations and accompanying massive financial penalties — in some cases amounting to tens of thousands of dollars — were without merit.\
Particularly galling to the judges, records show, is the fact the fraud allegations gave no specifics about what the claimant allegedly did to intentionally mislead the Unemployment Insurance Agency. That glaring weakness, combined with systematic problems in making sure claimants were even notified about the fraud determinations, prompted the judges to speak out about state violations of constitutional rights to due process.
"The agency has chosen to bumble on," with its "considerably flawed MiDAS system ... rather than fix its flaws or have its product reviewed by the agency's otherwise competent staff," Administrative Law Judge Winston Wheaton said in a Sept. 4, 2014, written decision that tossed out a fraud finding against a jobless claimant.
Other judges had complained about MIDAS at least as early as April 2014, records show. But it was not until Aug. 7, 2015, that the UI Agency put a halt to the system accusing people of fraud without any human review of its findings.
In a March 27, 2015, decision, Administrative Law Judge Douglas Wahl bemoaned "the numerous, computer-generated, fact-less, and merely conclusory adjudications … since the implementation of the agency's 'new and improved' computer system."
McMurtry, the MAHS official who oversees the judges, repeatedly sent them e-mailsexpressing concern not about those falsely accused, but about the feelings of the UI Agency claims examiners sent to represent the agency, records show.
"At a recent meeting, an (Unemployment) Agency representative commented that this last year has been the worst ever in terms of how the ALJs treat the UA representatives," McMurtry wrote to the judges In March 2016.
Agency staff members "beg not to go to the hearings because they do not like how they are treated by the ALJs," she wrote.
In another e-mail, McMurtry said that in November 2015, then UIA Director Sharon Moffett-Massey, who was reassigned in January of this year over the false fraud scandal, told her "a UIA rep had gone to their supervisor and said the ALJ berated them and made them cry."
In July 2015, McMurtry told the judges to "please avoid gratuitous or conclusory comments about the fraud cases or MiDAS."
"It has been suggested that our ALJs are demonstrating open and clear bias against the agency given the comments in at least four courtrooms within the past two weeks," McMurtry wrote. "ALJs have been saying that the cases are ridiculous, baseless, garbage ..."
If a computer automatically issued a fraud determination in error and the allegation contained no specifics that could help the claimant respond, isn't that charge baseless or ridiculous? McMurtry and MAHS Executive Director Chris Seppanen were asked Thursday.
Regardless of whether that's the case, judges are instructed to hear the appeal, take the case under advisement and speak through their written decisions, Seppanen said. Judges in the judicial branch might rule from the bench and expound on their thoughts, but "our judges don't do that," he said.
McMurtry told the Free Press the administrative law judges were understandably frustrated by MiDAS and a backlog of more than 27,000 fraud cases generated by a flood of appeals. Among other measures, the MAHS bumped the number of judges hearing fraud cases to about 45 — compared with about 28 today — to clear that backlog, she said.
But everyone must feel they received a fair hearing, said McMurtry, who told the judges in one of the e-mails she wasn't trying to restrict free speech, but to "protect the integrity of the hearing process." She also told the judges in July 2015 that state officials were working both to address the backlog and "the system that keeps creating the cases that comprise the backlog."
Administrative Law Judge Thomas Burden, who has since retired, complained in a July 14, 2015, written decision that MIDAS "floods the zone" by bombarding claimants with multiple findings that made it difficult to properly respond to each one.
Burden said in a May 2016 e-mail to MAHS human resources manager Terry Colby that later that month, two high-ranking MAHS officials came to his hearing room and told him he "was on some sort of 'hit list' maintained by the UIA," records show.
McMurtry said Thursday there was no hit list and Burden was removed from hearing fraud cases through an agreement reached with his attorney as a result of a disciplinary procedure not related to a fraud case.
But records show Burden did not face disciplinary proceedings and retain an attorney until after the agency began examining some of his cases in July 2015 — the same time he and another administrative law judge say he was barred from hearing fraud cases.
In March 2016, Administrative Law Judge Stephen Washington sent an e-mail expressing concerns about fraud cases not being assigned to Burden, and about the fact judges were not being assigned to the cases through a blind draw — the random way cases are normally assigned to judges.
Washington said "it is commonly known that ALJ Burden has been removed since last July 2015 from hearing any fraud cases ... after imposition of an assignment ban on him."
McMurtry replied, telling Washington to mind his own cases, since "employees should be able to complain about their own work situation, but never anyone else's." She confirmed cases were not assigned by "a true blind draw," but did not spell out exactly how cases are assigned, except to say: "We are comfortable that the assignment process ... operates to protect the rights of all claimants."
In April 2016, McMurtry e-mailed the judges to say she had learned some of them were "literally informing clients that they should join the lawsuit against the Unemployment Agency, and giving claimants the name of an attorney to contact."
She warned that "these matters are being looked into by the Unemployment Agency," and, if confirmed, "they plan to respond swiftly — with bar grievances and motions to disqualify the named ALJs on all matters, based upon bias and the agency's deprivation of the constitutional right to a fair hearing."
Burden declined comment to the Free Press, but among the questions he was sent in the course of an investigation was whether he told a client he should join a class action against the state.
At least one other judge, while not confirming she had acted in that way, pushed back at McMurtry.
"If there is a class-action lawsuit pending, I am hard-pressed to believe that advising a taxpayer that they can join that class action to seek redress for matters that are outside the jurisdiction of an administrative hearing would demonstrate bias," Administrative Law Judge Elizabeth Ann Haugen said in an April 2016 e-mail to McMurtry.
In July 2016, UIA attorney Stephen Geskey sent a supervisor an e-mail with the subject heading "proposed letter" in which he complained about a specific administrative law judge and said he expectedthat "these matters will be reviewed and appropriate action will be taken."
Geskey, who couldn't be reached for comment, didn't name the judge, but the cases he cited show it was Administrative Law Judge Marten Garn.
Among Geskey's complaints: Garn said as a result of continuing problems with MiDAS, "continuous man hours are expended by state employees and claimants and employers in preparation for ... cases that never would have been necessary if not for the faulty process at the outset." Geskey also complained that Garn had subpoenaed two UI Agency attorneys to a fraud-related hearing — an action Geskey believed was contrary to state law.
Records obtained under FOIA show Geskey's letter was forwarded to Stokes. McMurtry said Thursday she was never made aware of it and no action was taken against Garn.
McMurtry's e-mails also show concerns about the media attention the MiDAS scandal was garnering.
In June 2015, McMurtry e-mailed the administrative law judges to warn them that "in the past two weeks, we have had multiple media personnel contacting the office with questions — and attempting to sit in on hearings."
The hearings are public under state law, but McMurtry said in the e-mail that department policy "requires the media to submit a written request at least three days before the hearing," and "we are in the process of tightening the Media Contact Form and policy."
In the meantime, "if you are contacted by the media, or the media attempts to attend one of your hearings, please e-mail me immediately, so that we can alert our Communications Department," McMurtry wrote.
McMurtry said Thursday that the precautions are necessary so everyone knows who is at the hearing. She said there was an incident in which an administrative law judge was tricked into believing an observer was a student lawyer, when in fact it was a reporter.
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