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Dateline: Lansing, March 3, 2016

Auditor General Hits Snyder on Screw-Ups in UI “Robofraud” & Veterans Home

It’s not just Flint water that is getting screwed up by the Snyder Administration.

Two recent Auditor General reports have documented widespread problems in how decisions of the Governor and his appointees have hurt laid off workers and veterans residing in the state’s Grand Rapids Home for Veterans.

Robofraud – UIA Computers Run Amok

A February performance audit report of the Unemployment Insurance Agency (UIA) showed a consistent pattern of the agency falsely accusing laid off workers of fraud in applying for UI benefits. The UIA used a computer to make decisions about fraud accusations without any human oversight. The computer sent messages to obscure electronic message sites, often 6 months or longer after an individual had returned to work. When the individuals didn’t respond, the computer found them guilty of fraud and assessed 400% penalties plus 12% interest.

Most people found guilty of fraud only found out about the accusation when their tax refunds were seized or their wages garnished. When these false accusations were challenged in the UI appeal system, the Auditor General found that the guilty verdicts for misrepresentation were upheld on appeal only 8% of the time!

That means that innocent jobless workers were falsely convicted of fraud 92% of the time by a computer!

This gross miscarriage of justice was the subject of a recent public hearing on HB 4982, legislation sponsored by Representative Roger Victory, R-Georgetown Township. Victory’s bill would require the UIA to send second notifications of UI benefit redeterminations to laid off workers by certified mail. The bill also requires human review of computer “Robofraud” accusations to make sure that the individual willfully and intentionally violated the law before pursuing an accusation or imposing fines.

Several victims of “Robofraud” testified at a February 18th hearing on HB 4982 before the House Oversight and Ethics committee.

David Vela told the committee how he received UI benefits when he was laid off from work in 2009. When his employer called him back to work in 2010, he thought he was through with the UIA. He moved in 2011 but didn’t notify the UIA since his claim was long since settled. In 2012 the UIA computer decided his claim might be fraudulent and sent a notice to David at the agency’s Michigan Web Account Manager (MIWAM) page, an internal notification system that people can use to check on their UI claim while drawing benefits. David had no reason to monitor the MIWAM account, since he had been back to work for more than a year.

When he didn’t respond, the computer decided that David committed fraud and demanded restitution, a fine and interest totaling more than $25,000. The first time David even knew that the UIA was accusing him of fraud was when his wages were garnished to pay his fraud “penalty.” All told, David had more than $4,800 garnished from his wages and tax returns and had to work 6-7 days a week for 12 hours a day to pay his bills.

David received help from his union, employer and the University of Michigan Law School Unemployment Insurance Clinic in trying to fight this unjust fraud accusation. Eventually, an administrative law judge ruled in David’s favor and he got his money back. After harassing David for years, the UIA didn’t even bother to show up for his hearing.

David’s experience is similar to that of thousands of other laid off workers who have been screwed over by the “Robofraud” system and were assessed huge penalties and harassing collection efforts.

House action on HB 4982 is expected later this month. UI advocates and the state AFL-CIO are working with the bill sponsor and committee members to strengthen the bill.

Privatized Grand Rapids Veterans Home Cited for Short Staffing, Falsifying Records

The state Auditor General has issued a report criticizing the state owned Grand Rapids Home for Veterans for a variety of deficiencies in treatment of Michigan veterans residing in the home.
After the audit was made public, Jeff Barnes, Governor Snyder’s appointed director of the Michigan Veteran Affairs Agency, resigned his position. Barnes had previously served as Snyder’s campaign manager.

The Snyder administration privatized the staffing of the home several years ago, replacing more than 150 state workers with a contractual agreement with J2S, a private company. The contract was supposed to provide quality work at a savings of $4 million, but has been an abysmal failure.

The February performance audit report outlined a number of “material conditions” which could “impair the ability of management to operate a program in an effective and efficient manner.” Sub-standard conditions identified in the audit include:

  • 43% of resident location checks and 33% of fall alarm checks did not occur, although records submitted by the home falsely indicated that the checks occurred 100% and 96% of the time.
  • The contractor did not meet minimum staffing requirements 81% of the time, with shortages of staff as high as 22 people on a given day.
  • The privatized contractor did not develop, execute and monitor comprehensive care plans, failing to meet timely requirements 25-59% of the time.
  • The contractor did not establish adequate control over pharmaceutical insurance billing, running the risk of losing eligible insurance reimbursements of $883,700.
  • The contractor did not track or properly investigate resident complaints, including allegations of abuse and neglect.

A unique joint meeting of four separate legislative committees are holding a public hearing to discuss the audit. Committees taking part in the hearing include House Oversight and Ethics, House Military and Veterans Affairs, Senate Oversight and Senate Veterans, Military Affairs and Homeland Security.

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