Skip to main content

Michigan unemployment appeals surge amid agency mistakes


The September letter demanding a nearly $30,000 repayment was like a gut punch for Kellie Saunders. 

The Metro Detroit wedding photographer had just started getting back to business after a months-long pause during the pandemic when the Unemployment Insurance Agency notice arrived. 

Because of an error early in the application process Saunders had been overpaid unemployment benefits starting in April 2020, but wasn’t alerted to the issue until more than a year later. 

“I would absolutely not have had a problem taking less money, but this went on so long and this bill is so big,” she said. “I am thankful for all I received. It’s why my business survived.”

Saunders hired a lawyer and is joining a growing line of appellants challenging repayment demands from Michigan's Unemployment Insurance Agency, entering an appeals process where bureaucratic delays have only been complicated by the pandemic. 

Hundreds of thousands of unemployment claimants have received automatic waivers for money they were overpaid by the state, but there are thousands more caught up in an appeals process waiting to get some closure. 

The number of pandemic claimants appealing determinations from the state is unclear.

But administrative law judges whose job is to decide those appeals face a queue of about 4,500 cases — that’s after the state hired six additional judges and borrowed three others from other areas to help process the surge that peaked between July and September.

State and federal law largely requires that an agency mistake leading to overpayment should nullify requirements to have it repaid. But the surge in appeals means the process of resolving issues for most claimants is a bureaucratic quagmire. 

Some caught up in the adjudication process are individuals who scrambled to reattest to their qualification after receiving one of 648,100 notifications in late June that the state had included four unauthorized eligibility criteria for federal Pandemic Unemployment Assistance.

Those people who did reattest to their qualifications were pushed into additional review processes and delays, while those who didn’t respond were automatically granted waivers. In all, a recent audit found, at least $3.9 billion in ineligible payments were made to about 340,000 people.

Other unresolved issues stem from people who identified as part-time workers and were allowed under federal law to get aid, only to have the state later say they were ineligible. Another group includes self-employed claimants whose benefits were set based on their gross income rather than their net income. The mistake artificially inflated what those individuals were paid, and now the Unemployment Insurance Agency wants the money back. 

The agency is reviewing both issues "to assess what caused the situation, scope of the issue, the impact on all stakeholders, and how to proceed," said Nick Assendelft, a spokesman for the agency. "Part of that assessment will be to determine how many people are affected by this situation."

There are plenty of others who were granted benefits only to have another mistake snarl their eligibility months after they were determined to be qualified.

“They’re getting screwed by these determinations that are coming more than a year after they received benefits,” said David Blanchard, a lawyer who’s been representing several people appealing their redeterminations. 

Audit reports, emails and other documentation have shown the state, in an effort to process claims more quickly, pushed through thousands of claims early in the pandemic without a proper review of eligibility. Other issues, such as unauthorized eligibility criteria and conflicts between state and federal eligibility rules also snarled claims for applicants. 

The mistakes came as the agency faced repeated domestic and international fraud attacks, the rushed implementation of new federal programs, and an overwhelming increase in unemployment claims that created a months-long logjam.

Appeals surge

Over the past six months, the Michigan Office of Administrative Hearings and Rules — through which unemployment appeals flow — has hired an additional six judges on a limited basis for unemployment appeals and reassigned three others on a part-time basis from other areas of the agency to unemployment cases, said Suzanne Thelen, a spokeswoman for the agency.

Another 24 administrative law judges were hearing unemployment claims on a full-time basis before the new hires and reassignments were added. 

As of the week ending Nov. 21, 4,487 unemployment appeals cases were waiting to be scheduled. That was down from the first week of November when 4,855 were yet to be scheduled, Thelen said.

Over the past couple of months, the rate of new appeals referred to the administrative law judges per week has ranged between 502 and 707, down from a peak of 1,255 that occurred in a surge of cases between July and September, Thelen said.

Administrative law judges have increased the number of hearings in a given week from 32 to 36 per judge to expedite the appeals process, Thelen said.

“A large percentage of the appeals currently relate to eligibility issues, which are the focus of the current expedited docket,” said Thelen.

After a decision by an administrative law judge, claimants can appeal again to the Unemployment Insurance Appeals Commission, then to their local circuit court. 

The commission in late October issued two decisions that appeared to limit the agency’s window to recall money from those who were ineligible or overpaid. 

In one of the cases a claimant was awarded Pandemic Unemployment Assistance funds on April 29, 2020, because he was “unemployed as a result of the COVID-19 pandemic,” but the agency reversed the decision on May 19, 2021, because the man could not verify employment in 2019 or early 2020.

But state rules, the commission said, consider a determination final if it’s not challenged in 30 days. Those rules also limit the Unemployment Insurance Agency’s reversal of a prior determination for “good cause” to within a year of the initial determination. The window is extended to three years if fraud is suspected.

In the first case, the commission had "good cause" to reassess a determination within the year but failed to do so until after the year-long window had lapsed.

In a second similar case, the commission would not allow the agency to issue a March 2021 reversal of a July 2020 eligibility decision because the March reversal was issued more than 30 days after the initial decision and "was done so without a finding of good cause." 

Pending cases

While the expedited processing of appeals and the recent decisions from the commission are encouraging, they don’t cut down the appeals process for claimants, and likely can’t without a larger blanket waiver from Gov. Gretchen Whitmer's administration, Blanchard said. 

“They’re not getting those waivers," he said. "And that’s why we’re calling on state leadership to offer and grant a much greater waiver for people who relied on these benefits. ...We’re not talking about fraud. We’re talking about honest mistakes.”

Among those still awaiting determinations are three larger groups, plus many more who don’t exactly fit a category, said Blanchard and Tony Paris, a lawyer for Detroit’s Sugar Law Center for Economic and Social Justice.

For individuals who re-attested to their eligibility after the state sent out 648,100 notices in late June because of a state error, many are still being processed, said Paris. In a sense, their diligence in re-attesting was punished with more review and delays, while those who failed to do so were automatically granted waivers. 

“Many of those folks, if not most, are still waiting,” Paris said. “Either waiting for a redetermination or a phone hearing.”

Others are caught up in confusion over differences between state and federal law regarding the eligibility of part-time workers for pandemic aid. 

While the federal Pandemic Unemployment Assistance program allowed part-time workers to receive aid, state law still bans part-time workers from receiving jobless aid and requires claimants to mark that they are “able and available” for full-time work. While applying for benefits during the pandemic, claimants were either weeded out early on by a required attestation that they were "able and available" for full-time work, or questioned about how they responded to the requirement later.

The confusion affected part-time workers who didn’t feel they could honestly mark they were “able and available” for full-time work, but also full-time workers who didn’t feel they could meet the “able and available” criteria because of COVID barriers to full-time work. 

The appeals commission has been considering a case for months that could resolve some of the issues surrounding the “able and available” question. And Sen. Jeff Irwin, D-Ann Arbor, has a bill that would clarify state law to indicate that part-time workers were eligible to receive federal pandemic unemployment insurance.

His bill passed the Senate in June and is awaiting a hearing in the House.

An unknown number of self-employed, small business claimants eligible for Pandemic Unemployment Assistance — such as Saunders — also face repayment demands. 

Self-employed small business owners had the option of taking the base $160 Pandemic Unemployment Assistance grant or seeking a larger weekly stipend by submitting their prior income and supporting tax information. 

Saunders attempted to do as much but wasn’t sure whether to list her gross or net income while applying. Eventually, she decided the description provided by the agency sounded more like gross income than net and listed her gross income. She also submitted tax information to the agency that had both her gross and net income listed. 

More than a year after she qualified for PUA in April 2020, Saunders was notified she’d been overpaid to the tune of $29,962 because her payments were based incorrectly on gross income. She’s connected with other self-employed small business owners facing similar issues, forming a Facebook group with more than 70 members.

"My argument is that this was a clerical error," Saunders said. "If they looked at it and they knew the rules and they had my tax paperwork, why would they have given me the money?

“It’s overwhelming. It’s very stressful. But we were all in crisis mode at the time,” Saunders added, referring to both claimants and state unemployment officials. “I think a little bit of forgiveness will go a long way on both ends here.”

Besides those awaiting overpayment reversals, there are dozens more who were shut out of the program from the beginning and are still fighting those decisions, Paris said.

And there are others who have received waivers but still want an administrative ruling clearing their name. 

“Those (waiver) notices still read like, ‘You pulled a fast one on us and got away with it,’” Paris said. “Many of my folks want to be vindicated. They want an order from a neutral judge.”

eleblanc@detroitnews.com