Whitmer's Michigan paid $3.9B in pandemic unemployment relief to ineligible claimants: audit 

Improper payments allegedly continued after abuses were flagged, state says it won't claw back federal taxpayer dollars, and auditor general says "we don't know" if governor knew of corner-cutting.

Updated: November 27, 2021 - 10:34pm

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This week's Golden Horseshoe is awarded to Michigan Gov. Gretchen Whitmer's Unemployment Insurance Agency, which disbursed an estimated $3.9 billion in improper pandemic unemployment benefits and continued to pay ineligible claimants after being alerted to the issue, a state audit found.

The Michigan UIA paid out billions in improper payments through three federal pandemic relief programs: Pandemic Unemployment Assistance, Pandemic Unemployment Compensation, and Lost Wages Assistance. PUC, through the federal CARES Act, boosted unemployment payments by $600 per week.

"Ultimately, UIA's application and weekly certification processes allowed individuals without any prior attachment to the workforce and who may have been unemployed for reasons unrelated to COVID-19 to be paid PUA and associated PUC and LWA program benefits improperly," Michigan Auditor General Doug Ringler reported in the audit.

The audit found that UIA's senior leadership, through both actions and inaction, "directly contributed to the creation of invalid PUA application and certification processes and UIA's failure to timely and appropriately address issues pointed out by the U.S. Department of Labor and UIA staff.”

Two months after the CARES Act was signed into law by then-President Donald Trump, the U.S. Department of Labor "communicated at least a few states had 'seriously cut corners' in their implementation of PUA eligibility and noted significant issues with Michigan's eligibility documentation," the audit found.

Michigan's UIA continued to follow its improper payment criteria even after that first alert in May 2020 and after the U.S. DOL directly contacted the agency in June 2020 about its issues.

"UIA did not correct its improper eligibility criteria when the USDOL first communicated issues directly to UIA in June 2020," the audit found.

UIA continued paying ineligible claimants for an additional nine months.

When questioned, the UIA told the auditor general "that it bypassed established procedures requiring approvals from key UIA personnel when developing its PUA application and certification criteria due to the urgency to make the application available in response to the pandemic."

The UIA was unable to tell the auditor general who was involved in the decision-making process to inappropriately expand eligibility that ultimately led to billions in improper payments.

The audit revealed that a review of internal emails showed the UIA director discussed the criteria with the Executive Office of the Governor, the state Department of Labor and Economic Opportunity, and other senior staff at UIA.

In addition, a PowerPoint slide presentation prepared by executives at the UIA and state labor department in April 2020 was shared with the governor's office. It listed pros and cons of paying claims as quickly as possible vs. delaying payments until a worker's eligibility was verified.  

One slide "indicated any federal benefit ($600 PUC portion) UIA paid in error likely would not need to be reclaimed, as an advantage for paying ASAP." 

"[W]e don't know" if Whitmer was aware of the corner-cutting that led to ineligible claimants being paid, the Office of the Auditor General's communications officer told Just the News. "There isn't documentation indicating whether or not she was aware of the criteria."

"The Unemployment Insurance Agency was tested by a once-in-a-lifetime crisis, and while our staff is justifiably proud of its accomplishments, we also must use this as an opportunity to evaluate and improve," UIA Director Julia Dale told Just the News. 

Dale was asked if Michigan would try to reclaim its billions of dollars in improper payments. Noting the "money that was overpaid was federal dollars," Dale said, "The state will not pursue refunds of federal dollars."

The federal Department of Labor "authorized states to waive overpayments if the state determines that the payment of PUA was without fault on the part of the person who applied for benefits and that repayment would be contrary to equity and good conscience as defined by state law," Dale added. 

Dale said she could not speak to what the federal government will do in the case of the improper payments.

The audit also indicated UIA "will likely not recoup most of the overpayments because the improper payments were UIA's fault and not that of the claimants." 

"Prior to any independent audit findings, UIA initiated and implemented changes and the agency will continue to identify ways it can meet the OAG's recommendations," said Dale.

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