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Audit finds UIA overpaid $8.3B in fraudulent claims, Michiganders still being told they owe money

Gov. Gretchen Whitmer has called for the creation of an Unemployment Insurance Fraud Response Team to catch and prevent future cases of fraud.

MICHIGAN, USA — A nationwide audit released this week broke down each state's unemployment fraud rate. Previously, the Michigan Unemployment Insurance Agency (UIA) was thought to have overpaid $3.9 billion in improper benefits throughout the pandemic. The new audit shows that number is somewhere between $8.3 and $8.5 billion.

Wednesday, Gov. Gretchen Whitmer issued an executive order calling for the creation of an Unemployment Insurance Fraud Response Team, which would catch and prevent future cases of unemployment insurance fraud. 

On the positive side of things, the rate of fraud is down. In the three years before the pandemic, the fraud rate was just over 2%, lower than the national average of 3%. From October 2020 to September 2021, the fraud rate was 0.57%.

Sadly, this does not address the whole issue. In November, following the original Auditor General's report, a joint oversight committee hearing was held to address the failings of the UIA with such a costly overpayment. Michiganders have been getting letters stating they have to pay back the benefits that helped put food on their tables, sometimes in the tens of thousands of dollars.

"They're scared of letters they're getting saying they have they owe $20,000 back," said State Senator Ed McBroom during the November hearing. "They're still trying to figure out what's going on."

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The most recent audit calls all $8.3 billion "fraudulent", but much of that overpayment is the fault of the UIA itself.

In November, the Auditor General showed the UIA reviewed its Pandemic Unemployment Assistance eligibility criteria and was given guidance in October of 2020 to remove four improper criteria. The UIA did not remove them. $3.7 billion of those "fraudulent" claims have already been waived, since they were the result of UIA error.

That's not to say fraud isn't happening. Fifty people have already been charged with unemployment insurance fraud during the pandemic, nine of whom have plead guilty. Meanwhile, 37 cases are still pending, and five of those accused include UIA workers or contracted employees.

For people being told they still owe money back to the state, the UIA advises filling out a hardship waiver, which may remove the obligation stated in letters from the state. More information can be found here. 

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