Audit: Michigan UIA paid billions in possible overpayments and relaxed fraud controls during COVID-19

The Oversight Committee on State and Local Public Assistance Programs heard testimony that Michigan’s Unemployment Insurance Agency (UIA) issued billions of dollars in potential overpayments during the COVID-19 pandemic and weakened fraud controls while processing pandemic-era claims.

Auditor Brian Wyler, Audit Division Administrator for the Michigan Office of the Auditor General, told the committee the office issued two reports — January 2023 and December 2023 — that examined UIA claims processing and fraud investigations during the pandemic. “We concluded that UIA’s efforts were not effective,” Wyler said in prepared testimony to the panel.

The findings matter to taxpayers and employers because the reports show major federal and state funds were at risk. Auditors projected multiple overlapping estimates of overpayments rather than a single definitive total, but Wyler cited UIA’s own estimate that it had identified about $10,200,000,000 in overpayments and said the overall federal- and state-funded payments processed during the period totaled about $40,000,000,000.

Auditors described several specific control failures. Brian Wyler said UIA disabled a fraud-prevention prescreening tool known as “fraud manager” in mid-April 2020 to avoid slowing payments;…