LANSING, Mich. — Attorney General Dana Nessel announced Thursday that the state has reached a $20 million settlement in a class action lawsuit that claimed the Unemployment Insurance Agency (UIA) falsely accused recipients of fraud.
The settlement dates back to a case in 2015 titled Bauserman v. Unemployment Insurance Agency, which sued the UIA for using an automated system known as MIDAS to falsely accuse thousands of Michiganders of unemployment fraud, resulting in the wrongful seizure of their paychecks, income tax refunds and other assets without due process.
Since 2015, the case resulted in two significant decisions from the Michigan Supreme Court.
The Court held in April 2019 that the class action was timely filed, but claimants that had money collected from them for the first time on or after March 9, 2015 would be eligible to be included in this case. In July of this year, the Court held that the plaintiffs in this case could seek monetary damages from the state based on the alleged violation of Michigan's Constitution.
AG Nessel says this settlement honors her ongoing commitment to Michiganders who have been wronged by their government.
"This settlement honors my commitment to ensure those falsely accused by their government receive fair compensation for their suffering,” said Nessel. “All legal issues relative to the case have been decided and it is time to put this to rest and deliver this meaningful resolution to those Michigan residents who were harmed by this error.”
The UIA says this case has led to significant reform within the unemployment system, including changes to the MIDAS computer system.
“Today’s settlement resolves long-standing litigation involving the Unemployment Insurance Agency and parallels our commitment to reform the agency by providing exemplary customer service,” said UIA Director Julia Dale. “Those reforms include upcoming changes to the decade-old MIDAS computer system, instilling a human-centered focus at the agency, issuing more than 62,000 overpayment waivers, rebuilding the Trust Fund, redesigning our public website for easier access, reducing the case backlog, and implementing ethics and security clearance policies for employees and contractors.”
According to Nessel, parties will submit the settlement to the Court of Claims for approval in the coming months.
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