© 2021 MICHIGAN RADIO
91.7 Ann Arbor/Detroit 91.3 Port Huron 104.1 Grand Rapids 91.1 Flint
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations
Politics & Government

Report: State unemployment agency's actions during COVID-19 increased fraud risk

unemployment-claim-adobe-stock.jpeg
designer491 / Adobe Stock
/

Decisions made by Michigan's Unemployment Insurance Agency to address the unprecedented volume of unemployment claims during the COVID-19 pandemic made the state more vulnerable to fraudulent claims, according to an outside review of the UIA by Deloitte & Touche, LLP. The report was commissioned by the state's Department of Labor and Economic Opportunity (LEO) in July and released Wednesday. 

LEO and the UIA expect that the dollar losses from imposter fraud will likely be in the hundreds of millions.

In a cover letter to Governor Gretchen Whitmer's office accompanying the report, LEO acting director Susan Corbin wrote, "A final determination as to the magnitude of exposure is unlikely to be available until all instances of high-risk payments and credible reports of fraud are manually investigated. Because the Agency has paid out over $26B in benefits since this unprecedented crisis began in early March, a manual audit of every potentially fraudulent claim is not feasible at this time."

Corbin noted many of the losses relate to claims involving federal funds and do not impact the health of Michigan's Unemployment Trust Fund.

According to Corbin, the UIA has processed 2.8 million unique claims since mid-March, handling as many claims in seven months as the agency would normally see in six years.

"To distribute funds to eligible claimants, UIA had to implement new federal programs while under unprecedented pressure to quickly make payments to the millions of Michigan residents who found themselves without income during a public health crisis and while being targeted by sophisticated criminal organizations looking to defraud the state," wrote Corbin.

"While the Agency's previous decisions sought to balance fraud prevention and timely payment to eligible claimants, we strongly agree with the report's findings that policy, technological and organizational changes increased the Agency's potential exposure to fraud," said UIA acting director Liza Estlund Olson in a written statement.

The report identified seven specific problem areas that had a negative impact on the UIA's ability to identify and manage fraud. The report recommended corrective actions, many of which state officials said were implemented as early as this past May and June.

Related Content