Unemployment insurance fraud in Michigan
| Unemployment insurance |
|---|
|
| • Terms and definitions • Court cases • Unemployment insurance programs in the states • Reform proposals related to unemployment insurance • Reform activity in the states related to unemployment insurance • Index of articles about unemployment insurance |
| Click here for more coverage of unemployment insurance on Ballotpedia |
Unemployment insurance fraud is a term that refers to the unlawful receipt of unemployment insurance benefits by ineligible individuals. Unemployment insurance fraud occurs when an individual commits certain prohibited acts under the joint federal-state unemployment insurance program in order to claim benefits that they are not entitled to receive.[1]
Unemployment insurance fraud is committed in a variety of ways with penalties ranging from monetary fines to incarceration, depending on the state.[1]
This page provides information about unemployment insurance fraud in Michigan.
Background
The joint federal-state unemployment insurance program provides temporary monetary payments to individuals who have lost employment through no fault of their own. The federal government oversees the general administration of state unemployment insurance programs. The states control the specific features of their unemployment insurance programs, such as eligibility conditions and length of benefits.[2]
What is unemployment insurance fraud?
- See also: Unemployment insurance fraud
Unemployment insurance fraud occurs when employers, claimants, or criminals violate certain state unemployment insurance laws in order to claim unemployment insurance benefits that they are ineligible to receive.[1]
Unemployment insurance fraud can take many forms. Employers, for example, may seek to avoid tax liability by establishing false accounts. Claimants, on the other hand, may submit false information, continue collecting benefits when no longer eligible, or fail to be able or available for work, among other fraudulent actions. Criminals generally commit unemployment insurance fraud through identity theft, such as filing false claims using stolen identities or defrauding individuals through scam websites that mimic state unemployment insurance portals.[1][3]
Types of unemployment insurance fraud
Employers, claimants, and criminals can commit unemployment insurance fraud in a variety of ways. The following list identifies selected examples of unemployment insurance fraud:[4][5]Cite error: Invalid <ref> tag; invalid names, e.g. too many
Individuals
- Reporting false information on an unemployment insurance application.
- Failing to report employment, such as self-employment, temporary positions, or cash jobs.
- Neglecting to report income.
- Making false statements to receive or increase benefits.
- Failing to report work refusals.
- Falsifying work searches.
- Not disclosing a work separation.
- Receiving benefits when incapable or not available to work.
- Neglecting to report other remittances, such as workers' compensation payments.
- Assisting another individual to commit unemployment insurance fraud.
Employers
- Wrongly classifying workers as independent contractors.
- Neglecting to report wages paid to employees or falsifying employee information.
Criminals
- Using another individual's identity to file for unemployment insurance benefits.
Michigan unemployment insurance program: Fraud detection and prevention
The Michigan Department of Labor and Economic Opportunity administers the state's unemployment insurance program and works with local, state, and federal law enforcement agencies to identify and prosecute fraudulent unemployment insurance claims.[6]
Michigan's unemployment insurance fraud detection and prevention methods as of 2021 included using the Unemployment Insurance Agency's Fraud Manager Program to flag potentially fraudulent unemployment insurance claims.[6]
Unemployment insurance fraud penalties in Michigan
The following sections examine penalties associated with fraud in the joint federal-state unemployment insurance program.
Background
State laws governing unemployment insurance may classify unemployment insurance fraud as either a misdemeanor or felony offense, depending on the extent of the fraud. Federal guidelines require states to assess a minimum penalty of 15% of the amount of the fraudulent claim, according to the U.S. Department of Labor. States generally prohibit individuals found guilty of committing unemployment insurance fraud from receiving future benefits for a minimum of six weeks for every week of fraudulent claims.[1][4]
Criminal prosecution under unemployment insurance laws may result in the following penalties, depending on the state:[1][4]
- Fines up to or exceeding $10,000, depending on the state.
- Incarceration.
- Probation in addition to, or in lieu of, incarceration.
- Repayment of fraudulent benefits.
- Forfeiture of future income tax refunds.
- Permanent loss of eligibility for unemployment insurance benefits.
Michigan penalties
Individuals convicted of unemployment insurance fraud in Michigan may face one or more of the following penalties:[7]
- Up to one year in prison
- 100% the overpayment amount in fines for the first case of fraud, 150% for the second case of fraud
- Pay restitution (pay back the unlawful unemployment insurance benefits received)
- State tax return garnishment
Unemployment insurance improper payment rate
The following sections examine improper payment rates in the joint federal-state unemployment insurance program.
Background
Improper payment rates include all root causes of unemployment insurance overpayments, including administrative errors and unintentionally incorrect (non-fraudulent) claimant information. The improper payment rate does not necessarily indicate the rate of fraudulent payments in a state.[8]
The improper payment rates displayed in the map below represent data collected for the three-year period from July 1, 2019, through June 30, 2022.[8] During that period, the following five states demonstrated the highest improper payment rates:
- Virginia - 43.80%
- Tennessee - 39.84%
- Florida - 39.58%
- Rhode Island - 32.90%
- Kansas - 29.42%
The following five states demonstrated the lowest improper payment rates:
- Hawaii - 5.77%
- Utah - 6.29%
- Idaho - 7.46%
- North Dakota - 8.49%
- Kentucky - 8.85%
Unemployment insurance improper payment rate in Michigan
The unemployment insurance improper payment rate in Michigan was 18.9% from July 1, 2019, through June 30, 2022, according to the U.S. Department of Labor.[8]
Notable periods of unemployment insurance fraud in Michigan
The following sections examine notable periods of fraud in the joint federal-state unemployment insurance program.
The U.S. Department of Justice (DOJ) established the multi-agency National Unemployment Insurance Fraud Task Force (NUIFTF) in response to the increase in federal funds attributed to unemployment benefits during the coronavirus (COVID-19) pandemic. The task force broadly aimed to combat fraud related to the Paycheck Protection Program (PPP), the Economic Injury Disaster Loan (EIDL) program, and state-administered unemployment insurance programs. The DOJ as of March 2021 had filed criminal charges against 474 defendants aiming to obtain more than $569 million through fraud—including unemployment insurance fraud—related to the coronavirus (COVID-19) pandemic.[9]
Michigan paid $790.4 million in fraudulent unemployment claims between April 1, 2020, and March 31, 2021, according to the U.S. Department of Labor.[10]
Creation of unemployment fraud response team
Michigan Gov. Gretchen Whitmer (D) on December 29, 2021, signed Executive Order 2021-16, which established an unemployment fraud response team to recommend actions to the director of the Michigan Department of Labor and Economic Opportunity and the heads of other departments for reducing the number of fraudulent unemployment insurance payments. The order also tasked the team with helping to coordinate and expedite law enforcement activities related to unemployment insurance fraud.[11]
Whitmer issued the order the same day the Michigan Unemployment Insurance Agency released a report that found the state paid up to $8.51 billion dollars in fraudulent unemployment insurance benefits between March 1, 2020, and September 30, 2021. The report estimated that 97% of the fraudulent payments were federally funded, and 3% were paid out of Michigan's State Unemployment Trust Fund.
The order provided for the termination of the response team effective December 31, 2023.[11]
See also
- Unemployment insurance fraud
- Unemployment insurance in Michigan
- History of unemployment insurance fraud in Michigan
Footnotes
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 U.S. Department of Labor, "Report Unemployment Insurance Fraud," accessed May 20, 2021
- ↑ Employment Law Firms, "How Unemployment Works," accessed May 18, 2021
- ↑ Social Security Administration, "Unemployment Insurance, Then and Now 1935-1985," accessed May 19, 2021
- ↑ 4.0 4.1 4.2 Work It Daily, "Are You Committing Unemployment Insurance Fraud By Accident?" April 14, 2020
- ↑ Financial Web, "What is Unemployment Fraud?" accessed June 21, 2021
- ↑ 6.0 6.1 Michigan Department of Labor and Economic Opportunity, "What is fraud?" accessed October 13, 2021
- ↑ U.S. Department of Labor, "Chapter 6: Overpayments," accessed August 1, 2023
- ↑ 8.0 8.1 8.2 U.S. Department of Labor, "Unemployment Insurance Payment Accuracy by State," accessed February 3, 2023
- ↑ U.S. Department of Justice, "Justice Department Takes Action Against COVID-19 Fraud," March 26, 2021
- ↑ U.S. Department of Labor, "Unemployment Insurance Payment Accuracy Datasets," accessed October 8, 2021
- ↑ 11.0 11.1 Michigan Office of the Governor, "Unemployment Insurance Fraud Response Team," accessed January 12, 2022
| |||||||||||
