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Jack Lessenberry

Jack Lessenberry

Does Government “By the Numbers” Really Work? Maybe Not…

December 29, 2017

DETROIT – Virtually everyone now knows about the lead poisoning horror that afflicted Flint, costing the state many millions and leaving thousands of children with uncertain futures.  But there’s been far less attention paid to another terrifying and bewildering nightmare that hit tens of thousands of Michiganders, improperly seizing their assets and saddling them with draconian penalties that in some cases, cost them their homes.  Worse, they were essentially shamed as criminals who had tried to defraud the state’s Unemployment Insurance Agency.

This happened to more than 37,000 Michigan residents, most over a two-year period ending in August 2015.  But everyone was innocent, the victim of a computer run amok, a computer the Snyder Administration was so proud of they named it MIDAS. Though that formally stood for Michigan Integrated Data Automated System, it also recalled the mythical ancient king who turned everything he touched into gold.  MIDAS the computer turned people’s lives into hell.

“It’s hard to grasp the damage done to people’s lives,” said Jennifer Lord, an employment law attorney with the Royal Oak firm of Pitt McGehee. “I think this hasn’t gotten enough attention because this is such a complicated issue,” she added.  What happened was this: With considerable fanfare, the state unveiled its new $47 million MIDAS computer in 2013, while more quietly laying off about 400 full and part-time agents who had been paid to check for fraud.   Now, they said, the computer would do that—and it did, with high efficiency. People’s records were flagged; they were tracked down, and assessed with the harshest penalties in the nation.

Those tagged were forced to pay back four times the amount they improperly received, plus additional penalties and 12 percent interest.  Most were bewildered.

They had essentially no right of appeal.  “UIA does have counselors you can talk to, but only if you haven’t been accused of doing anything wrong,” Lord said, noting that this was equivalent to saying you have a right to a lawyer unless accused of a crime.  People lost homes, relationships – lives were horribly afflicted.  Since few had the ability to pay, MIDAS quickly began garnishing their wages, even tracking them down in other states.

Nobody seemed to notice that the incidence of fraud seemed vastly higher than ever before.  “Most studies put it at between four and six percent,” attorney Lord said.  “And it’s usually petty; some guy gets called back to work and doesn’t notify the state right away and gets maybe an extra week of compensation.”  Many of those accused of fraud were neither highly educated nor well-connected.  “They didn’t know what to do.  They felt helpless,” Lord said.  But some knew something was wrong, and began contacting lawyers.  Three came to Jennifer Lord.

Finally, the state checked – and found that MIDAS had run amok.  The computer was flagging any discrepancy on any application as proof of fraud on behalf of the person making the claim.  No human being ever checked the computer’s work. Unemployment Insurance Agency data obtained by the Traverse City Record-Eagle shows that during the 22 months MIDAS was running the show, it flagged 53,633 cases as fraudulent.

But fewer than seven percent really were.

The state improperly accused more than 52,000 people of fraud, and seized money from most.  The total cost of the human devastation may never be known.  “The computer made all these determinations without any human contact with claimants,” James Sisk, a retired judge who used to teach employment law, told the Record-Eagle.  The state has admitted its error and unplugged the computer. Michigan has been willing to pay back the money it seized, including penalties and interest, to people who can prove their claim.

But there’s been no formal apology.  Despite complains about her management style, Governor Rick Snyder did not fire Sharon Moffett-Massey, the head of the Unemployment Insurance Agency during the crisis, but merely reassigned her to “special projects.”  Earlier this month, the governor signed a package of bills overhauling the UIA and drastically lowering the penalties for fraud.  There will now be an advocate on staff for those who are accused of fraud, and to protect against identity theft. 

But what wasn’t in those bills was a Victims’ Compensation Fund, though one may soon be passed.  The legislature and governor agree one is needed, though they differ on the amount of money that should be available.  The governor’s office is talking in terms of $20 million; State Representative Joe Graves, (R-Linden) the sponsor of the other bills, thinks $30 million would be more appropriate.  Jennifer Lord believes “$100 million would be closer to what is needed to make these folks whole.”  Though she doesn’t make a big deal about it, something is needed to make her whole too.

Over the last three years, she has worked “thousands of hours” on these cases without being paid a dime.  She and other lawyers taking these cases could be paid by the state if what they are doing is declared a class action lawsuit.  Originally it was – but the Michigan Court of Appeals reversed that on a technicality, saying the defendants waited too long.   They appealed, and now, whether the attorneys toiling on behalf of those unjustly accused of fraud ever get paid is up to the Michigan Supreme Court.

The Unemployment Insurance Agency mess wouldn’t seem to have much in common with the other great Snyder administration scandal, the poisoned water in Flint.  Except, the attorney said, “It is another case of governing by spreadsheet, a philosophy of treating people as statistics.”

In both cases, this may have cost the state far more than showing a little more caring and compassion ever would.   

Jack Lessenberry is the head of journalism at Wayne State University, serves as Michigan Radio’s senior political analyst and writes regularly for several publications. He also serves as The Toledo Blade’s writing coach and ombudsman and is host of the weekly television show Deadline Now on WGTE-TV in Toledo.

December 28, 2017 · Filed under Jack Lessenberry



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