Bombshell: UIA Paid $8.5B In Fraudulent Claims

The Unemployment Insurance Agency paid a stunning $8.5 billion in fraudulent claims, a report released Wednesday said, leading to a sharp rebuke from Republicans in the state.

A Deloitte report released Wednesday estimates that out of a potential $52.2 billion in attempted fraudulent claims between March 1, 2020, to September 30, 2021, an estimated $2.7 to $2.8 billion was paid to claims involving likely imposter fraud and an estimated $5.6 to $5.7 billion was paid to claims involving likely intentional misrepresentation fraud. The bulk of payments were federally funded through the various Pandemic Unemployment Assistance programs.

Since most of the fraudulent claims came from federal jobless programs, the state’s trust fund was minimally affected, the agency said.

"It’s extremely disheartening that bad actors have defrauded the much-needed benefits intended for hard-working Michiganders and the scale of their actions is stunning," UIA Director Julia Dale said in a statement. "We have been successful over the past year in limiting the percentage of cases that are fraudulent to less than 1 percent, but we will never stop fighting for our workers."

The $8.5 billion in likely fraudulent claims is mostly separate from the $3.9 billion in payments to those who qualified under criteria later deemed ineligible, though there is some overlap. The state has already waived $3.7 billion in overpayments for that population.

Roughly 3 percent of the fraudulent claims, or $249 million, were paid out through the state program. The remainder was federal. Deloitte found in its report.

In total, the agency has paid out $39 billion to 3.3 million claimants.

Governor Gretchen Whitmer in a news release announced the report and staggering fraud figure as she signed Executive Order 2021-16 permanently establishing the Unemployment Insurance Fraud Response Team.

Additionally, Ms. Whitmer issued Executive Directive 2021-14directing the Unemployment Insurance Agency to continue to use new technologies, integrate stakeholder expertise, partner with community organizations to educate potential UI claimants, and prioritize enforcement of UI fraud cases through the Response Team.

"It’s extremely important that we continue to push back on bad actors who look to take advantage of a vital safety net resource for out-of-work Michiganders," Ms. Whitmer said in a statement. "While we are seeing increased success in identifying and stopping fraudulent claims, we cannot let up. We owe it to workers to make sure this jobs resource is available when they need it the most. Today’s action ensures the Unemployment Insurance Fraud Response Team continues to have the expertise and tools necessary to ramp up our efforts to prevent bad actors from defrauding the system."

Republicans, who have been particularly critical of the UIA during the pandemic, were quick to blast the administration given the fraud figure released Wednesday.

"This is yet another reason why Whitmer’s administration can’t be trusted to provide the help needed for people in crisis," Gustavo Portela, communications director for the Michigan Republican Party, said in a statement. "We’ll replace her next year with a Republican governor who won’t let fraudsters walk away with billions of taxpayer dollars that should be going to help people hurting because of Whitmer’s lockdowns."

Rep. Steve Johnson (R-Wayland) said in a statement he expects consequences within the Whitmer administration.

"The Whitmer administration has continued to show incompetence and disrespect for the taxpayers they serve," he said. "The Whitmer administration should be ashamed that they lost over $10 billion in taxpayer money under their ‘leadership’ and demand that Steve Gray pay back his $85,000 hush fund buyout."

Mr. Gray was director for the first 11 months of the pandemic and has come under criticism for responding to calls early in the crisis to push more money out the door to claimants by loosening fraud projections. He received a severance payment as part of his resignation.

Republican Tom Leonard, former House speaker and candidate for attorney general, said Ms. Whitmer should answer for how the fraud was allowed to occur.

"For nearly two years now Governor Whitmer has allowed mistake after mistake by inept directors all while working families have paid the price," he said in a statement. "People are suffering and they need real help filling their gas tanks and making ends meet at the grocery store. But all Gov. Whitmer’s UIA has done is waste billions on fraudulent claims while making the workers who deserve help wait for months on end. The people of Michigan deserve better."

The report notes the large number of claims that were coming in and federal rules requiring state agencies to allow individuals to self-attest that they qualified for benefits.

At the peak of claims, the agency received 77 times more claims that it did in an average week before the pandemic. In the spring of 2020, the volume peaked with a high of over 388,000 claims in a single week, compared with just 5,000 claims before the pandemic and a previous all-time weekly high of 77,000 during the Great Recession.

The creation of the Fraud Response Team comes after Attorney General Dana Nessel launched an Unemployment Insurance Fraud Task Force. The work of the Task Force, which was first announced in June 2020, has resulted in 54 Michiganders being charged with UI fraud by either state or federal authorities – in some cases netting millions of dollars – with 37 cases pending. Nine people have pleaded guilty or been convicted and three have been sentenced. Those accused of facilitating fraud include five UIA employees or contract workers.

"I applaud Gov. Whitmer’s action to ensure bad actors continue to be identified through the Unemployment Insurance Fraud Response Team," Ms. Nessel said. "Michiganders currently out of work should not have to worry that the benefits available are being exploited by criminals, which is why our task force has remained focused on rooting out fraud. I look forward to working with our agency partners to support this new endeavor."

The directive solidifies the following actions within the UIA:

  • Implement daily reviews of all claim activities and establishing procedures to resolve matters for victims of identity theft who need to file a new claim;
  • Continue following procedures to resolve matters for victims of identity theft in real time. Identified theft victims must be empowered to file legitimate claims and access resources available to them to protect their identity;
  • Modernize its current IT system. A new claims processing system that is agile, robust and secure will allow for quicker response to economic changes and provide more internal control over touchpoints with our customers;
  • Focus on a human-centered, plain language approach with customers by making sure correspondence isn’t confusing, requests by the agency are clear, and missteps can be avoided when dealing with customers; and
  • Launch an aggressive staff training regimen to address knowledge and skills gaps to better allow the agency to pivot in times of crisis and move resources fluidly to address growing issues.

Potential Senate Primaries Between Incumbents Looming

A new state Senate map adopted Tuesday by the Independent Citizens Redistricting Commission will pit several incumbent Senate members against each other, prompting some to move and others to weigh their next move.

As passed, the new maps also make for a more competitive battle for control of the Senate, which Republicans have controlled since 1984 and had been able to maintain under the previous method of drawing new maps. The new maps on paper could make control of the Senate a tossup, with the possibility for either party of a narrow majority in the 38-member chamber.

For the Republicans, Sen. Rick Outman (R-Six Lakes) and Sen. John Bumstead (R-Newaygo) both reside in what will be the new 33rd Senate District. The district contains all of Montcalm and Newaygo counties and parts of Ionia, Kent, Muskegon, and Ottawa counties. There has been talk that Mr. Bumstead might move out of the district.

Messages left Wednesday with Mr. Outman and Mr. Bumstead were not immediately returned.

Another potential GOP primary would put Sen. Aric Nesbitt (R-Lawton) in the new 20th Senate District with Sen. Kim LaSata R-Bainbridge Township), which contains parts of Allegan, Berrien, Kent and Van Buren counties. Mr. Nesbitt is considered the frontrunner for the Republican caucus leader next term.

Mr. Nesbitt said Wednesday he intends on running in the 20th and "looks forward to continuing to represent" the people of the district. A large piece of the district, the portions of Allegan and Van Buren counties, are in his current district.

A message left Wednesday with Ms. LaSata was not immediately returned.

On the Democratic side there are also primaries looming.

Sen. Stephanie Chang (D-Detroit) would be placed in the 10th Senate District with Sen. Paul Wojno (D-Warren).

Ms. Chang said Wednesday she is in the process of moving to the new 3rd Senate District where she and her family once lived. This would put Ms. Chang, who is considered one of the frontrunners for the Democratic caucus leader position, into a primary with Sen. Adam Hollier (D-Detroit), one of the Senate Democrats’ 2022 campaign co-chairs.

Another district that could feature a Democratic primary is the new 8th Senate District which includes parts of Oakland and Wayne counties. Democrats Sen. Rosemary Bayer of Beverly Hills, Sen. Marshall Bullock of Detroit and Sen. Mallory McMorrow of Royal Oak would all reside within the new district. Ms. Bayer said Wednesday she will be moving to the new 13th Senate District.

Messages left Wednesday Mr. Bullock was not immediately returned.

Mr. Nesbitt minced no words Wednesday in his disappointment in the commission’s work.

"It’s pretty clear that the redistricting commission tried to gerrymander things in favor of the Democrats," Mr. Nesbitt said.

When asked how it could be a partisan gerrymandered map when the commission had to have the votes of multiple Republican, Democratic and independent, Mr. Nesbitt said: "Bullshit."

Mr. Nesbitt pointed to examples of independent commissioners such as Anthony Eid, whose social media comments and support of Democrats in the past came under fire by conservatives earlier this year. He added that he believed the commission really only had a couple Republican members, with a major push made to draw maps in favor of Democrats.

With that in mind, Mr. Nesbitt said he was still confident in the party’s chances in 2022. He said the party has 17 incumbents and a strong pool of candidates ready to run. He added the GOP has good issues to run on such as opposing the governor’s coronavirus pandemic response.

"They’ll be on defense. … I would not want to be a Democrat in this cycle," Mr. Nesbitt said. "I feel there’s a good pathway to maintain a Republican majority."

Mr. Nesbitt said there are competitive districts in Macomb County as well as the Tri-Cities area district including Bay City, Midland and Saginaw to target. He also said he believed the new 28th Senate District including East Lansing and parts of Ingham, Clinton and Shiawassee counties would be in play too. He pointed to the large GOP gains in Virginia in November, where there was a large shift away from Democrats in less than a year after the 2020 elections.

Democrats for their part were excited about the prospect of control of the chamber being potentially within striking distance. Incumbents did have concerns over some of the district boundaries, particularly the changes to majority-minority districts in places like Detroit.

"As a millennial… literally my entire life the Senate has been under Republican control … we’ve got a lot of momentum," Ms. Chang said. "I think we’re positioned very well."

Ms. Chang said the commission did a good job for their work taking place during a pandemic and under major scrutiny.

"It was messy, but it was transparent," Ms. Chang said.

For candidate recruitment Ms. Chang said it will come down to having active, visible candidates who are plugged into their districts and able to effectively deliver a localized message.

"This is one of the unfortunate realities of redistricting," Ms. Chang said of multiple incumbents being in some new districts. "Every single one of my campaigns I’ve been focused on positives and what I’ve been able to accomplish."

She said her focus will be on getting her campaign running and getting reacquainted with the part of the district where she once lived.

While pleased with the maps putting the Senate in play for Democrats, Mr. Hollier said he still had huge concerns over the commission’s breaking up of majority-minority districts in its mapping process.

He said keeping communities intact and having majority-minority districts maintained are not exclusive, adding that various organizations provided sample maps showing it could be done.

"They got bad advice," Mr. Hollier said of legal and expert advice on the makeup of districts in Black communities such as Detroit. "I think the commission could do it with no problem. It would not have been that difficult. They 100 percent could have done it."

As to a likely primary with Ms. Chang, Mr. Hollier said he will continue to do what he has done in past campaigns. He said he would also be pointing to his support for changes to the state’s auto insurance laws which he said has provided savings to residents. He would also be pointing to work to keep auto factories open in Detroit.

"I know this is the community I was born and raised in," Mr. Hollier said of his district, which is where he plans to continue raising his family.

Mr. Hollier said he agreed with an idea pushed by proponents of the ballot measure that created the redistricting commission, that being voters should be able to choose their elected officials and not officials choosing their voters. In what appeared to be a reference to Ms. Chang, Mr. Hollier said he believed people prefer someone who is from their community rather than someone who was moving around to represent them.

Ms. McMorrow, when asked about a possible primary with Mr. Bullock, said: "I love Marshall" and that she has no intention to go negative during any potential primary.

The 8th Senate District contains parts of Detroit as well as parts of Berkley, Birmingham, Clawson, Ferndale, Huntington Woods, Oak Park, Royal Oak and Royal Oak Township.

She expects her campaign to be centered on her work in office so far and what she brings to the table. There will also be steady outreach into the parts of the new district that are not in her current district to learn more about local needs.

"It comes down to what you’re doing day-to-day," Ms. McMorrow said.

For the 2022 elections, she said Democrats need to strike the right balance between local issues that people care about as well as promoting things they have done for their districts.

As to the possibility of flipping the chamber based on the new maps, she said: "Oh my God, it’s so exciting."

Ms. Bayer’s move to the 13th Senate District would put her in a district containing a small part of her current district including Bloomfield Township. The new district also includes Northville, Novi, Plymouth and West Bloomfield Township.

Despite it being a lot of new territory to get to know, Ms. Bayer said she will approach it as she does any other challenge: by going all-in and working hard.

"I’m the queen of doors," Ms. Bayer said. "We’re going to shift where we do our doors."

Michigan breaks single-day COVID-19 case record — Here’s what to know about the virus this week

There were 11,490 cases confirmed on Dec. 27, according to data on the state’s COVID-19 dashboard

That’s the highest single-day report of positive cases. But Monday’s record could be eclipsed this week. 

On Wednesday, Michigan reported 25,858 cases over a two-day period (Tuesday, Dec. 28 and Wednesday, Dec. 29) for an average of 12,929 per day.

The state’s daily positive cases are released Mondays, Wednesdays, and Fridays but those dates are not indicative of when someone took a test. According to the state’s dashboard, "cases are shown by onset date or lab specimen collection date…", meaning someone who tested on Monday but wasn’t confirmed positive until Wednesday will be listed as a positive case on the day they tested – Monday.

The country also set a record for Covid cases this week. 

On Tuesday, the U.S.’s seven-day average of new cases was 265,427. Data from Johns Hopkins University shows that the previous record was 250,000 cases per day, set in mid-January.

Omicron cases in Michigan

There are now 75 cases of the omicron variant confirmed in Michigan:

  • Detroit: 22 cases
  • Macomb County: 16 cases
  • Wayne County (excluding Detroit): 10 cases
  • Oakland County: 9 cases
  • Kent County: 5 cases
  • Genesee County: 3 cases
  • Ingham County: 3 cases
  • St. Clair County: 3 cases
  • Washtenaw County: 2 cases
  • Allegan County: 1 case
  • Livingston County: 1 case

While the omicron variant appears to be mild, it is considered highly contagious. Its symptoms can seem like those of a cold or the flu, so it is easy to confuse the virus with something else and potentially spread it.

If you cold symptoms, such as a sore throat, don’t self-diagnose – get a Covid test. 

Where to get a COVID-19 test

Covid tests can be found at pharmacies, doctor offices, and state facilities around Michigan.

Getting a test may be difficult, though. Some testing sites are dealing with staff shortages and limited supplies.

Emcura, an urgent care with locations in Bloomfield Township and Northville Township, has been short-staffed this week because workers are catching Covid.

The medical director at Emcura, Dr. Manish Kesliker, said the locations are running low on supplies needed to do PCR tests.

Find a Michigan COVID-19 test site here. 

MRA Update

Senate Bill 461 and Senate Bill 462 together would amend the Medical Marihuana Facilities Licensing Act to require as a condition for licensure that an applicant have a liability insurance policy meeting certain requirements and refer license applicants to the Marijuana Regulatory Agency instead of the Department of Licensing and Regulatory Affairs and the Medical Marihuana Licensing Board. 

Senate Bill 461 was sponsored by Sen. Curt VanderWall, R – Ludington, Senate Bill 462 was sponsored by Sen. Paul Wojno, D – Warren, and copies can be found here and here.  


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Marijuana News, Updates, & Articles of Interest

DCD continues to exist as the premier resource helping municipalities navigate the waters of cannabis policy. We would be more than happy to answer any questions you may have regarding medical or recreational cannabis policy, procedure, and more. DCD is available for presentations to municipal boards, for one-on-one meetings, and for consultations.

We are here to help you with: municipal lobbying, license application writing and assistance, business plans, state required operations manuals and compliance, facility design, corporate structure, and design and branding. 

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