Class-Action Lawsuit Filed Against Michigan Unemployment Insurance Agency for Recovery of Illegally Seized Tax Refunds

ROYAL OAK, Mich., Sept. 15, 2015 /PRNewswire/ -- A class-action civil lawsuit has been filed against the State of Michigan Unemployment Insurance Agency (UIA). The lawsuit, filed with the State of Michigan Court of Claims, has been brought on behalf of hundreds of workers who have had their federal and state tax refunds illegally seized by the State. This was a result of the state's UIA computers, which utilize a highly suspect automated fraud detection program, erroneously flagging a large number of claims as improper.

According to the complaint, the use of unmanned machines to illegally seize tax refunds owed to workers is a widespread problem with disastrous consequences. The practice is causing hardships for hundreds, if not thousands, of individuals who depend on receiving their income tax refunds.

The lawsuit asks that the plaintiff and all class members be awarded economic damages in the amount equal to their seized tax returns. It also seeks an order declaring the UIA's practice of automated decision-making illegal and another permanently enjoining UIA from intercepting and seizing income tax refunds.

The complaint lays out the illegal nature of these seizures. Without providing notices to claimants stating the grounds for its allegations that they fraudulently received unemployment benefits or of the required 60 days to present evidence to the contrary, the UIA arbitrarily seizes their tax refunds directly from state and federal treasury departments.

"In its ongoing efforts to operate more like a for-profit business, the State of Michigan has laid-off scores of UIA workers and installed machines. The State claims the automated processing is superior to actual people in detecting fraudulent claims," said Jennifer Lord, of Royal Oak-based Pitt McGehee Palmer & Rivers, one of the attorneys representing the plaintiff.                                                                                                                   

"Unfortunately, the machines are hardly substitutes for humans, as they can't assess whether a detected discrepancy in a claim is an innocent mistake or the product of fraudulent conduct," said Lord.

According to Lord, UIA's machines are actually programmed to do the opposite of what a human claims reviewer would do. Upon discovery of a discrepancy in an unemployment claim, the machines automatically determine it to be fraudulent and immediately authorize seizure of any federal and state tax refunds the claimant is owed without providing the required advance notice.

Based on public documents and recent media reports of this growing problem, Lord says this is a high-tech nightmare scenario which has already resulted in tens of millions of dollars in tax refunds being improperly seized from thousands of people who've done nothing  wrong or illegal.

The case has been assigned to the Honorable Cynthia Stephens of the Michigan Court of Appeals serving as trial judge for the Court of Claims.  No hearing date on this case has been set.

The full complaint can be viewed at this link: http://pittlawpc.com/wp-content/uploads/2015/09/Bauserman-Complaint-time-stamped-9-9-15.pdf

About Pitt McGehee Palmer & Rivers 
Based in Royal Oak, Pitt McGehee Palmer & Rivers is one of Michigan's leading law firms specializing in civil and workplace rights. Its attorneys represent clients in a broad range of actions, including sexual harassment, wrongful discharge, whistleblower issues and discrimination based on age, gender, disability, race, religion and national origin. For additional information visit pittlawpc.com.

Contact: Eric Hood/[email protected]/248-802-0236

SOURCE Pitt McGehee Palmer & Rivers

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