What to Do if You Are Accused of Fraud by the Michigan Unemployment Agency
Jump in Unemployment Fraud Cases
State of Michigan employees that investigate fraud for the Unemployment Insurance Agency (UIA) have told me that the amount of fraud cases has greatly increased. No doubt that part of the reason for this is because of the high unemployment rates that Michigan has been experiencing. State employees have to follow certain guidelines when making the determination that there has been fraud. Recently, there has been of changes in these guidelines. I have been told that this is part of the reason that there is such an increase in the number of Fraud cases. These changes mean that many more people are being accused of fraud than used to be under the old guidelines.
Different Issues Where Fraud Is Found
In the fraud cases that I have handled, the state agents have relied on many different reasons as well as different issues for alleging fraud. I have seen people accused of fraud based on the issue of separation. They might have said that they were laid off and the Employer comes back and says that the Claimant quit. I had one client that had told the agency that he had quit for personal reasons. They gave him unemployment because the UIA agent that he filed with said it was a lay off. Then the UIA came back later when they found out he had quit for personal reasons and said my client lied. We were able to get a good decision in this case because it was the UIA’s mistake.
Others have been accused of fraud under the availability or ability provision. One of my clients was accused because she was getting unemployment and she applied for Social Security Disability. The UIA said that there was intentional misrepresentation. The reasoning was that if a person applies for Disability, the person has to say that they are disabled from doing full time work. When my client did eventually get Disability, she immediately called the UIA and told them. They then decided that she was misrepresenting that she was able to work all that time. Of course, my client was not trying to deceive the UIA. The judge gave us a good decision in this case.
Have you ever lied to the Unemployment Agency
The Big Issue: Misreporting
Without question, most of the fraud cases that I have dealt have been because the Claimant did not report properly to Marvin. In making a determination that there is fraud, the Agency looks for several things. They ask:
• How big a mistake was the error? What percentage was the difference between what the Claimant reported and what the Employer reported?
• How many times did the Claimant misreport?
• Over how long a period of time did the Claimant misreport?
• Did the Claimant state that they were scared or they needed the money?
The UIA will look at the reports to Marvin as well as your written statements to the agency. They will send out a Request for Information regarding possible fraud. If you do not fill this out, they will probably take that as an admission of guilt. In some cases (though not all), an agency representative may call and ask some questions about their suspicions of fraud.
Steps of Protest/Appeal
How to Avoid a Fraud Accusation?
So, what can be done to avoid this mess? There are ways to completely avoid it. In my experience, most people have no idea that they have made a mistake until it comes back to bite them. But there are some things that you can do to make it better.
The first thing is ALWAYS TELL THE TRUTH to the best of your ability. Crossing your fingers is not going to help. I am not sure the UIA believes in little white lies. If you find out that you misreported something, you should contact the agency to explain what happened. (Keep a record of who you talked to, when, and what they said.) Contact them as soon as you can to explain. The longer you wait, the greater the possibility that they will say that it was an INTENTIONAL misrepresentation. Misrepresentation is not as bad as intentional misrepresentation. They will both cause you problems, but the intentional kind will bring a penalty of as much as four time the amount of overpayment.
Telling the truth means two things. Obviously, it means that what you say is accurate. But the law puts a greater responsibility on us all beyond that. You need to give full information when asked for it. If you OMIT information purposely the Agency will believe that you did it to mislead them. That is why people swear to tell the truth, the whole truth, and nothing but the truth.
So, fraud is found when people make an intentional misstatement of fact (a lie). Or fraud is found when they omit or do not offer a relevant fact. So, tell the truth, and tell the whole truth.
Show Your Story Is Consistent
Secondly, you should always keep a copy of everything you say to the agency. This is important in case something is lost by the agency, which happens all the time. For Fraud cases, this is extremely important. One of the ways that the UIA or a judge decides whether a person is lying is based on the consistency of their story. Often a person writes something and then months later writes another statement. Both statements may be true, but may look inconsistent. You may forget the details that you emphasized in the first letter. Then if you emphasize other details or another side of the story, it may be construed as inconsistent or even a lie.
Of course, in your mind, you know the whole story. It all makes sense to you. You need to be careful, especially with more complicated situations. The more complicated a situation is, the more often the facts look inconsistent. This is so even when there are no real contradictions.
Keep copies of what you write. Make sure that you maintain the basis of your story each time you are asked.
Who Told You What?
Thirdly: Get the names of everyone you speak to at the agency. Record the date when you spoke to them. Note what they told you. Also maybe how you spoke to them (phone, in person, email). You can make email inquiries through your on-line account. Keep a copy of any of these correspondences.
If someone at the UIA tells you something that does not make sense (happens all the time), ask another person. There is turn-over at the UIA like every other business. The people you talk to do not always know what they are talking about. If you cannot get through by phone (it is difficult), send an e-mail question to the Agency.
Finally: Read the information book that UIA gives to you. If you did not get one in the mail, go the nearest office. Read the whole thing. Every time I have been to a hearing of fraud, the Claimant is asked, “Did you get the book? Did you read the book?” Everyone that says that they got it but did not read it looks foolish.
What Did You Actually Earn?
When the issue is reporting, there are a few different questions you should be ready for. The UIA gets bi-weekly reports from you, the Claimant, when you certify with Marvin. But they also get reports from the Employer, though not as often.
The first question is, did you actually get what the Employer said that you got. I had one case where the employer kept no time clock. The Claimant did not like it, but was just working part time and had no idea, at the time, how important the question would become. At first, the Employer said they had no record of her hours. Later, they produced a record that in my opinion was a fabrication for the hearing. A few weeks part time employment ended up costing the Claimant all of her unemployment benefits. She had to pay back thousands of dollars because she did not keep records to show when she actually got paid for which work.
Also when you report, make sure you report GROSS, NOT NET. Many people get in trouble because they report the amount of the check after deductions. But the UIA is expecting the gross before deductions. When the Agency gets the income reports from the employer the amount will be different if you do not report gross.
There is sometimes a problem with vacation pay. Some of my clients reported to Marvin only to find out later that they received vacation pay. The best thing to do here, as whenever there is an error in reporting, is tell the UIA as soon as you find out about it. Go in person or however you can reach them. Make a record of who you spoke to, when, and what they told you. At least then you can defend yourself in that you tried to fix the problem once you found out.
The biggest problem with this is that most people that need to prove what they were actually paid rarely keep complete or accurate records on the issue. Keeping all your pay-stubs will help. But some employers do not have a lot of information on their stubs. In some cases, the best thing for you to do is keep a record of your wages for yourself.
Do you think it is fair to penalize people that are determined to have lied?
When Did You Actually Get Paid?
Another question is: when did you earn this money? For unemployment, you need to report what you earned for the weeks that you certify with Marvin. It does not matter when you actually received the payment. When did you earn it? I have seen many people get in trouble because they report wages when received, not earned. Some employers do not help with this question when they hold checks for more than a week or when they have inconsistent paydays. This is why keeping your own record of what you earn can help.
If this is your situation, you may want to keep a record of when you got your paycheck along with the other information. This is what happened to another of my clients, but she did not keep a record of these things. The Employer kept checks for weeks before finally giving them to the Claimant. With this particular client of mine, the Judge did not believe her (although the Appellate Commission reversed the Judge’s decision on other grounds).
The point is that the more records you keep, the better your chance to confirm your side of the story. The more facts you can prove, the better your chance of having the Judge believe you that you were not trying to deceive.
Did you understand all of the questions you have been asked by the UIA?
What If They Call Me?
In some cases, a UIA agent will call a Claimant to inquire about possible fraud. The agents in the fraud unit that I have asked about this have often said they do not usually do this. But I have had several clients where the Agency fraud unit has called them. In those cases, the Agent for the agency tries to use what was said in the call to demonstrate fraud.
So, if you get a phone call from an agent regarding fraud, listen carefully to what you are asked. Make a record for yourself of what was said. You may need it later at a hearing. Note what you were asked and your response. The Agent for the UIA will be taking notes on their end, but they do not always get it right.
Do not tell the Agent that you were scared. They always take this to indicate that you knew you were doing something wrong. Do not tell the agency that you did not know what to do because you needed the money. They always take that to mean that you were trying to get the money even if you did not deserve it. Do tell them the truth.
What Do I Do?
If you get an Inquiry regarding possible fraud, do not ignore it. Answer the questions as truthfully as you can. If you get a Determination or a Re-determination, protest until you get a hearing.
If you need help in filling anything out or understanding what is being asked for, you can contact me for a consultation. While the Unemployment Advocacy Program does not pay for representation in fraud cases, you can still hire someone if you want, to help you. If you want to contact me to discuss a consultation, to protest a determination, or representation at a hearing, feel free to contact me. You can send an e-mail if you need any information.
About the Author
Andrew Grosjean is an attorney at law (licensed in CA). He lives in Michigan and has worked extensively with Michigan Unemployment Hearings since 2001. His wife, Glenda Grosjean, is also an Advocate for Unemployment (since 2004) and for Disability.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2012 Andrew Grosjean