Michigan will settle 2015 unemployment false fraud lawsuit for $20 million
The state of Michigan has reached a $20-million settlement in a class action lawsuit from unemployment claimants who were wrongly accused of fraud, resulting in the seizure of their property without the right to be heard.
The lawsuit, Bauserman v. Unemployment Insurance Agency, was filed in 2015 and argued that the state's automated jobless system, called MiDAS, falsely accused thousands of Michigan residents of fraud, resulting in the seizure of paychecks, income tax refunds and other assets.
"First, as counsel for the class action plaintiffs, we fought hard for seven years to vindicate the plaintiffs’ civil rights," Michael Pitt, counsel for the plaintiffs and founding member of the law firm Pitt, McGehee, Palmer, Bonanni and Rivers in Royal Oak, said in a news release. "Second, the attorney general and the state of Michigan demonstrated the will to come to the table and make this right, and by agreeing to this settlement, we believe they have done so."
The state has acknowledged that as many as 40,000 Michigan residents were wrongly accused of fraud but there's no estimate currently available as to how many claimants will be eligible for settlement payments, according to a spokesperson for the office of Michigan Attorney General Dana Nessel.
Earlier this year, the parties worked with a mediator to negotiate a resolution of the class action, a news release from the attorney general's office said. The mediator had access to detailed records and information to determine how many people were affected by the auto-adjudication system, how much of their money was seized and how much money had already been refunded by the state since the fraud auto-adjudication system was discontinued, the release said.
In April 2019, the Michigan Supreme Court ruled claimants who had money collected from them for the first time on or after March 9, 2015, could be included in the potential class.
In July, the state Supreme Court ruled that the thousands of Michigan residents wrongly accused of fraud could seek financial relief from the state.
"This settlement honors my commitment to ensure those falsely accused by their government receive fair compensation for their suffering," Nessel said in the news release.
The settlement money was appropriated last month in a supplemental funding bill. In the coming months, the parties will submit the settlement to the Court of Claims for approval.
Another class action lawsuit filed against Michigan's Unemployment Insurance Agency
Judge says Michigan's UIA must halt collection efforts for claimants with pending appeals
Separately, two lawsuits were filed this year against the state's jobless agency from claimants who received jobless benefits in the pandemic. The first, filed in the Michigan Court of Claims, said the agency violated the due process rights of Michigan residents by seizing tax returns and engaging in other collection efforts more than a year after benefits were paid and seeking recovery of overpayments that are required to be waived, among other allegations.
In August, a judge said the agency must halt collection activities for claimants who were told they were overpaid benefits in the pandemic and then appealed that decision.
A separate lawsuit was filed in U.S. District Court for the Eastern District of Michigan in August from several claimants who say they have not received all the benefits they were entitled to in the pandemic, if at all.
Contact Adrienne Roberts: amroberts@freepress.com.
This article originally appeared on Detroit Free Press: Michigan to settle unemployment false fraud lawsuit for $20 million
