LANSING – The state’s unemployment system, already under heavy scrutiny from a pair of lawsuits and the subject of legislation to make major changes, suffered another blow Thursday with an audit sharply critical of its much criticized automated fraud detection system.

Several of those cited for fraudulently claiming unemployment benefits have said the Unemployment Insurance Agency’s automated process failed to inform them of the finding, improperly ceased their benefits and wrongly ordered them to pay back benefits received as well as penalties.

The audit called for UIA to improve its efforts to obtain and consider supporting information as well as provide those claiming unemployment benefits with the rationale for alleging fraud.

Between October 1, 2013, and March 31, 2015, the UIA issued 60,234 redeterminations finding intentional misrepresentation of claims. Auditors reviewed 60.

Auditors said that the UIA could have done more to contact 22 who did not respond to the agency’s original request for information. The agency also failed to inform those claiming benefits that failure to respond would result in a finding of fraud. The UIA assessed $184,795 in penalties on these 22 people alone.

Two of the 22 requests were returned as undeliverable by the U.S. Postal Service, but the UIA did not try to resend the returned requests to claimants because the deadline for them to respond already would have passed.

Auditors also criticized the thin nature of the questions the UIA asked of those claiming benefits. The forms asked if the claimants intentionally provided false information to obtain benefits that they were not entitled to receive and why the claimants thought they were entitled to receive benefits.

“The handbook states that adjudicators should closely examine all of the facts related to (re)determinations of intentional misrepresentation,” the audit says. “Examples of relevant facts to consider in making the (re)determinations include claimants’ education levels, language barriers and prior claims experiences.”

The UIA did not include the reasons for alleging fraud in violation of the Code of Federal Regulations and state law, auditors said.

In response, the UIA agreed such (re)determinations should include the facts and supporting information. The agency said in 2015 it began reviewing its processes and now staff investigates fraud allegations to ensure the inclusion of relevant facts and support for such findings.

Auditors also said while the agency has made significant upgrades to its call center telephone system since 2011, significant problems remain.

Of the 263,726 calls made to the call center during the business weeks ending August 22, 2014, and September 22, 2014, the UIA did not answer 89.1 percent. Of the 28,825 calls that were answered, 28.9 percent of callers hung up while waiting on hold.

In its response, the UIA said those numbers reflect call attempts, not the true number of unique callers. There were actually 58,212 unique calls during the period auditors reviewed, with 28,131 going unanswered, the UIA said. During the same period in 2015, total unique calls were 33,688, the UIA said, with 21 percent going unanswered, which the agency noted was a 29 percent improvement.

Hang-ups are down 15 percent in the past year, the UIA said.

Rep. Scott Dianda (D-Calumet) called the situation appalling and chided the UIA for trying to parse the numbers.

“Whether it’s 50 percent or 90 percent, it’s still too much,” he said in a statement. “Not everyone has a computer and Internet access, particularly in my district where there are entire regions that have no Internet access. The bottom line is that if you are required by UIA to call in, then someone needs to answer the phone.”

Auditors also criticized the UIA’s process for claimant and employer mail returned as undeliverable and without a forwarding address as ineffective and inefficient.

In 2014, the UIA estimated that the U.S. Postal Service returned 451,000 undeliverable mail items on which the agency spent $3.8 million for postage. The UIA, in its response, agreed the issue is a problem, but also said the 451,000 undeliverable mail items was less than 8 percent of the mail the UIA received for the year.

The audit covered the period from October 1, 2012, through September 30, 2015.

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