Michigan Unemployment Agency reports $6.6B in overpayments and fraud recovery efforts

The Oversight Subcommittee on State and Local Public Assistance Programs convened on May 22, 2025, to address critical issues surrounding the Michigan Unemployment Insurance Agency (UIA) and its handling of pandemic-related claims. The meeting focused on the financial implications of fraud and overpayments during the pandemic, as well as the agency's efforts to improve its processes.

The session began with inquiries regarding the estimated percentage of fraudulent claims from the UIA during 2020. While specific figures were not immediately available, it was acknowledged that the total amount disbursed in claims was substantial, potentially reaching tens of billions of dollars in Michigan alone. The committee requested a detailed report on the percentage of fraudulent claims compared to the total disbursements.

A significant point of discussion was the reported overpayments of approximately $6.6 billion for Pandemic Unemployment Assistance (PUA) claims from January 2020 to June 2022. The committee sought updates on the agency's recovery efforts and measures taken to prevent future fraud. The UIA reported recovering $90 million from fraudulent claims but noted that a court injunction had paused collection efforts. With the injunction now lifted, the agency is preparing to resume its collections.

The meeting also highlighted the agency's internal audits, which indicated that a third of randomly selected claims should have been flagged for potential fraud. In response, the UIA has updated its applications to comply with statutory requirements and implemented a 10-day payment hold to verify claimants' eligibility before disbursing benefits. This process aims to enhance the agency's ability to detect and prevent fraudulent claims.

Additionally, the committee raised concerns about the former UIA director, Steve Gray, and whether he received a severance package amid the fraud issues. While details were unclear, it was suggested that he may have received compensation despite the agency's challenges.

Overall, the meeting underscored the ongoing efforts of the UIA to address past shortcomings and improve its fraud detection processes. The committee emphasized the importance of transparency and accountability as the agency moves forward in its recovery and reform initiatives. Further updates and reports on the requested data are anticipated in the coming weeks.