UIA director tells Michigan oversight panel agency has cut fraud, outlines MyUI modernization and collections relaunch

Unemployment Insurance Agency Director Jason Palmer told the Michigan House Oversight Committee on State and Local Public Assistance Programs that the agency has taken steps to address fraud and errors tied to pandemic-era benefit programs and outlined a plan to modernize eligibility and fraud detection systems.

The committee convened for a hearing on two Office of Auditor General audits from 2023 that examined UIA investigations, fraud controls and claims processing. UIA officials told lawmakers that criminal actors and program design led to substantial overpayments during the pandemic, that some audit findings remain open while others are closed, and that the agency is pursuing recoveries and system-level changes.

Palmer, introduced as "the new UIA director," summarized actions the agency has taken since his appointment, including resolving three lawsuits, reorganizing a legal and compliance bureau, creating a modernization work group of external business and labor stakeholders, and reconstituting investigation and cross-match routines used to detect imposters and improper payments. "We have translated hard lessons into smarter planning and stronger systems," Palmer said. He added that the agency has reprogrammed MIDAS where needed and is preparing a new statewide system, MyUI, planned for 2026.

Why it matters: lawmakers pressed that millions—or by some estimates billions—of dollars paid in pandemic unemployment help were later judged by auditors to be overpayments or vulnerable to fraud. Committee members sought specifics on the size of overpayments, recoveries, waivers issued and steps to make sure future benefits are screened before payments.

Key numbers and claims discussed - Committee members cited a Deloitte estimate of about $8 billion in PUA overpayments and the Office of the Auditor General (OAG) estimate of up to $15 billion; committee members framed overpayment estimates for the pandemic period in that range. UIA officials did not dispute the range as a topic of discussion but described recovery and prevention work underway. - UIA officials said the agency has recovered about $90 million in stolen benefits and reported 165 criminal charges with 126 convictions and 107 sentenced so far, and that 35 UIA employees have been terminated, separated or resigned over ethics or criminal issues tied to claims work. - UIA told the committee it has issued roughly $60 million in overpayment waivers since 2020, and cited a separate audit finding that $6.6 billion in PUA overpayments occurred between January 2020 and June 2022.

What UIA officials described doing now - Improved cross-matching and automation: UIA staff said they have automated monthly cross‑matches against death and incarceration records, restored original applications in MIDAS, and fixed programming that prevented some wage cross‑matches from running. Those steps were described as addressing several OAG findings. - Fraud-detection and enforcement: UIA described a mix of identity-proofing (MyLogin, ICON cross-checks), a proprietary "fraud manager" program, and partnerships with federal and state law enforcement. Officials said Michigan has recovered funds and pursued criminal cases and that identity-fraud as a share of total claims is now about 0.57%—below the U.S. Department of Labor benchmark cited by UIA presenters. - Staffing and near-term capacity: UIA said it is using a $2,600,000 integrity grant from the U.S. Department of Labor to fund nearly 35 limited-term positions to supplement permanent staff in investigations and collections; the agency said the fraud-and-investigations unit is roughly 70 positions when fully staffed and that 30 limited-term staff support current workload through December 2025. - Technology modernization (MyUI): UIA said it will replace the legacy MiWay/MIDAS environment with MyUI (targeted for 2026). UIA described planned anti‑fraud modules, machine-learning and network analysis tools, a pilot program to detect fake document images, improved scanning and redesigned claimant correspondence and forms.

What remains open or unresolved - Audit closures: UIA said the December 2023 fraud and investigations audit had four findings that are now closed; the January 2023 claims processing audit had 14 findings, six closed and eight still open. UIA staff said they are awaiting validation by their Office of Internal Audit for some closures and want to validate coding and testing in MyUI before formally closing all findings. - Collections pause and litigation: UIA staff told the committee they had been under a "full collections pause" because of a court injunction tied to litigation stemming from pandemic-era payments. Officials said those lawsuits were recently settled and that the agency is preparing to relaunch collections. - Waivers and legal standards: Committee members pressed UIA on how waiver decisions were made during the pandemic (for example, when the agency cites "agency error" under the Employment Security Act). UIA said waiver authority and limits are prescribed in law and that waivers typically address penalties and interest in settlements or overpayments tied to agency error or good‑conscience considerations.

Lawmakers' concerns and follow-up requests Lawmakers repeatedly pressed for more granular figures on total dollar amounts recovered, the portion of overpayments later waived because of agency error, and why benefits went to incarcerated people or the deceased in some audit samples. Representative questions also focused on past management decisions such as periods when the agency's fraud-manager processes were deactivated and staffing or contractual practices that auditors flagged. Chair Wilford said she intends to escalate some data requests and consult other committee chairs about next steps.

Votes and formal actions Representative Brock moved to adopt the minutes of the committee's May 15 meeting; the motion prevailed by unanimous consent, the committee record shows.

The hearing record ends with members continuing to press UIA for follow-up materials and validation of audit closures; the committee adjourned after final questions.