Report Mi Auditor General Uia Claims Processing Pandemic R186031921 2023 02

Summary

A performance audit report of the Michigan Office of the Auditor General on claims processing during the COVID-19 pandemic at the Unemployment Insurance Agency, Department of Labor and Economic Opportunity, report number 186-0319-21, with a report letter dated January 6, 2023 from Auditor General Doug A. Ringler. The report states that from March 15, 2020 through June 30, 2022 the agency paid $39.9 billion in unemployment compensation claims from 5.8 million claims created for 3.48 million claimants. It concludes that the agency's claims processing and communications with claimants were not effective during the pandemic, and presents 14 findings and 2 observations. Among them, the audit reports the agency could not support $10.2 billion in Pandemic Unemployment Assistance payments and may have improperly granted an estimated $1.7 billion in overpayment waivers.

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Office of the Auditor General
Performance Audit Report

Claims Processing

During the COVID-19 Pandemic

Unemployment Insurance Agency
Department of Labor and Economic Opportunity

January 2023

186-0319-21

State of Michigan Auditor General
Doug A. Ringler, CPA, CIA

The auditor general shall conduct post audits of financial
transactions and accounts of the state and of all branches,
departments, offices, boards, commissions, agencies,
authorities and institutions of the state established by this
constitution or by law, and performance post audits thereof.
The auditor general may make investigations pertinent to
the conduct of audits.
Article IV, Section 53 of the Michigan Constitution

Report Summary
Performance Audit
Claims Processing
During the COVID-19 Pandemic
Unemployment Insurance Agency (UIA)
Department of Labor and Economic
Opportunity

Report Number:
186-0319-21
Released:
January 2023

To slow the spread of COVID-19 after the first confirmed cases in Michigan in March 2020,
the Governor declared a state of emergency and issued a series of executive orders that
placed restrictions on public gatherings. These orders temporarily closed schools,
businesses, and other employers resulting in the largest spike in unemployment in
Michigan history. The federal Coronavirus Aid, Relief, and Economic Security (CARES)
Act created new federal unemployment compensation (UC) programs, including Pandemic
Emergency Unemployment Compensation (PEUC), Pandemic Unemployment Assistance
(PUA), and Pandemic Unemployment Compensation (PUC), increasing the weekly benefit
amount (WBA) and expanding eligibility to claimants not otherwise eligible for
unemployment benefits. From March 15, 2020 through June 30, 2022, UIA paid $39.9
billion in UC claims from 5.8 million claims created for 3.48 million claimants.
This audit report is the fourth of a series of five audit reports on UIA claims processing
during the COVID-19 pandemic.
Audit Objective
Objective 1: To assess the effectiveness of UIA's efforts to process unemployment
insurance (UI) claims in accordance with selected State and federal requirements
during the COVID-19 pandemic.
Findings Related to This Audit Objective

Material
Condition

Reportable
Condition

Conclusion
Not effective

Agency
Preliminary
Response

Although UIA made billions of dollars of fraudulent
overpayments in various unemployment programs, it
identified that only 28 PUA claims, totaling $342,000,
were the result of intentional misrepresentation by
claimants (Finding 1).

Partially agrees

As a means of expediting payments to claimants at the
onset of the COVID-19 pandemic, UIA temporarily
reassigned its Investigations Division staff and removed
many of its fraud detection and prevention controls,
significantly diminishing its ability to ensure UI
program integrity (Finding 2).

Agrees

Findings Related to This Audit Objective
(Continued)
UIA could not support the appropriateness of $10.2
billion in PUA payments, mostly related to its inclusion
of invalid eligibility criteria in the PUA application and
lack of eligibility criteria in the weekly benefit
certifications at the onset of the PUA program
(Finding 3).

Material
Condition

Reportable
Condition

Agency
Preliminary
Response

Agrees

UIA may have improperly granted an estimated $1.7
billion in overpayment waivers but did not consider
waivers for PUA claims totaling $280.7 million which
met the waiver criteria (Finding 4).

Partially agrees

UIA became aware of 314,000 PUA claimants without
prior qualifying employment (prior attachment to the
workforce). Although it paid at least $3.3 billion in
benefits to them, UIA did not take timely action to limit
further overpayments or begin collection efforts
(Finding 5).

Agrees

UIA changed its criteria for flagging benefit payments
needing a manager review prior to release. This allowed
high dollar and high-risk benefit payments without
review, and some managers' reviews were ineffective
because UIA did not provide adequate training and
guidance (Finding 6).

Partially agrees

UIA did not ensure the Michigan Integrated Data
Automated System (MiDAS) contained claimants'
original PUA applications, which could impact future
appeals or protests involving the claims (Finding 7).

Agrees

During much of the COVID-19 pandemic, UIA did not
timely identify and follow up on situations in which
claimants received UC benefits and earned wages during
the same quarter. UIA may not be able to recoup
improper benefits because of the delays in follow-up
(Finding 8).

Partially agrees

UIA improperly waived the requirement for claimants in
certain programs to certify they were able and available
for full-time work (Finding 9).

Agrees

UIA programmed MiDAS to automatically approve an
increased weekly benefit amount based on the
claimant's self-attestation of earnings. However, it did
not review the appropriateness of income
documentation submitted by claimants with their initial
PUA applications before approving the increase
(Finding 10).

Agrees

UIA should have required claimants to seek work in
November 2020; however, it did not do so until the
benefit week ended June 5, 2021 (Finding 11).

Agrees

UIA did not consistently meet select federal claims
processing performance standards (Finding 12).

Agrees

Observations Related to This Audit Objective

Material
Condition

Agency
Preliminary
Response

Reportable
Condition

UIA could analyze its claims data to identify and followup with claimants receiving UC benefits whose
separation reasons or COVID-19 related attestations
could trigger its reasonable suspicion protocol
(Observation 1).
Not applicable for observations.

Establishing and monitoring metrics related to case and
document processing for claims could help UIA ensure
the timely processing of claims-related information and
address longstanding deficiencies in meeting the U.S.
Department of Labor's broader performance goals
(Observation 2).

Audit Objective

Conclusion

Objective 2: To assess the effectiveness of UIA's communications with UI claimants
during the COVID-19 pandemic.

Not effective

Findings Related to This Audit Objective

Material
Condition

Reportable
Condition

Agency
Preliminary
Response

See (Finding 4).

Partially agrees

UIA was unable to respond or timely respond to
claimants' communications throughout much of the
COVID-19 pandemic. Also, some of UIA's written
communications to claimants contained confusing
wording or wording that appeared contradictory
(Finding 13).

Agrees

UIA increased its staff assisting in its call center but did
not ensure that it or its contractors sufficiently
monitored the new and inexperienced staff to ensure a
positive customer experience for its claimants
(Finding 14).

Audit Objective
Objective 3: To compile and provide information on UI claims processed by UIA
during the COVID-19 pandemic and other relevant data.
Findings Related to This Audit Objective
None reported.

Material
Condition

Agrees

Conclusion
Information
provided
Agency
Reportable
Preliminary
Condition
Response
Not applicable.

Obtain Audit Reports
Online: audgen.michigan.gov
Phone: (517) 334-8050

Office of the Auditor General
201 N. Washington Square, Sixth Floor
Lansing, Michigan 48913
Doug A. Ringler, CPA, CIA
Auditor General
Laura J. Hirst, CPA
Deputy Auditor General

Doug A. Ringler, CPA, CIA
Auditor General
201 N. Washington Square, Sixth Floor • Lansing, Michigan 48913 • Phone: (517) 334-8050 • audgen.michigan.gov

January 6, 2023

Ms. Susan R. Corbin, Director
Department of Labor and Economic Opportunity
300 North Washington Square
Lansing, Michigan
and
Ms. Julia Dale, Director
Unemployment Insurance Agency
Cadillac Place
Detroit, Michigan
Dear Ms. Corbin and Ms. Dale:
This is our performance audit report on Claims Processing During the COVID-19 Pandemic,
Unemployment Insurance Agency, Department of Labor and Economic Opportunity. This is the
fourth issued report in a series of performance audits of UIA.
We organize our findings and observations by audit objective. Your agency provided
preliminary responses to the recommendations at the end of our fieldwork. The Michigan
Compiled Laws and administrative procedures require an audited agency to develop a plan to
comply with the recommendations and to submit it to the State Budget Office upon completion
of an audit. Within 30 days of receipt, the Office of Internal Audit Services, State Budget Office,
is required to review the plan and either accept the plan as final or contact the agency to take
additional steps to finalize the plan.
Sincerely,

Doug Ringler
Auditor General

Michigan Office of the Auditor General
186-0319-21

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TABLE OF CONTENTS
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Page
Report Summary

Report Letter

Audit Objectives, Conclusions, Findings, and Observations
Processing UI Claims in Accordance With Selected State and Federal Requirements
During the COVID-19 Pandemic

Findings:
1. Intentional misrepresentation on PUA claims not established.

2. UIA needs to consistently apply its fraud controls.

3. Improvement needed to ensure claimants meet federal eligibility criteria.

4. Improvements needed to UIA's PUA requalification, recertification, and
overpayment waiver processes.

5. UIA needs to ensure claimants' prior attachment to the workforce.

6. Improvements needed to UIA's BPR process.

7. UIA needs to maintain claimants' original applications in MiDAS.

8. Wage crossmatch leads require follow-up.

9. Improvements needed to ensure claimants are able and available for
full-time work.

10. Improvements needed to calculate accurate WBAs.

11. Improvement needed for reinstating UC requirements temporarily waived.

12. Improvement needed to consistently meet select federal claims
processing performance standards.

Observations:
1. Data analytics could help UIA identify suspicious claims.

2. Establishing and monitoring metrics could help improve the timeliness of
case and document processing.

Communicating With UI Claimants

Findings:
13. Improvements needed to UIA's responsiveness to claimant contacts and
communications.

14. UIA needs to ensure the completion of call center staff monitoring.

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Processing UI Claims and Other Relevant Data

Supplemental Information
Exhibit 1 - Description of Unemployment Programs and Program Progression

Exhibit 2 - Timing of Total Count of UC Claims Paid by Benefit Week, Dollar
Amount of UC Benefit Payments by Week Paid, and Total Dollar Amount of
Payments by Claim Type and Benefit Week

Exhibit 3 - Top 15 States With the Largest UC Benefit Payments and UC Benefit
Payments for USDOL Region 5

Exhibit 4 - Top 15 States With the Largest UC Benefit Payments by Labor Force
Participant and UC Benefit Payments by Labor Force Participant for USDOL
Region 5

Exhibit 5 - Top 15 States With the Largest Number of Benefit Weeks Compensated
and Number of Benefit Weeks Compensated for USDOL Region 5

Exhibit 6 - Top 15 States With the Largest Number of Benefit Weeks Compensated
by Labor Force Participant and Number of Benefit Weeks Compensated by Labor
Force Participant for USDOL Region 5

Exhibit 7 - Michigan's UC Benefit Payments by Program and Their Related
Overpayments

Exhibit 8 - Range of Weekly Benefit Payments by UC Claim Type and Range of
Benefit Payments by Dollar Amount and UC Claim Type

Exhibit 9 - Weekly UC Benefit Payment Ranges By Standard Occupational
Classification (SOC) Code Major Groups

Exhibit 10 - Total UC Benefit Payments by SOC Code Major Groups

Exhibit 11 - Call Center Activity

Agency Preliminary Responses
Finding 1 Agency Preliminary Response and Auditor's Comments to Agency
Preliminary Response

Finding 2 Agency Preliminary Response and Auditor's Comments to Agency
Preliminary Response

Finding 3 Agency Preliminary Response and Auditor's Comments to Agency
Preliminary Response

Finding 4 Agency Preliminary Response and Auditor's Comments to Agency
Preliminary Response

Finding 5 Agency Preliminary Response and Auditor's Comments to Agency
Preliminary Response

Finding 6 Agency Preliminary Response and Auditor's Comments to Agency
Preliminary Response

Michigan Office of the Auditor General
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Finding 8 Agency Preliminary Response and Auditor's Comments to Agency
Preliminary Response

Finding 9 Agency Preliminary Response and Auditor's Comments to Agency
Preliminary Response

100

Finding 10 Agency Preliminary Response and Auditor's Comments to Agency
Preliminary Response

103

Finding 13 Agency Preliminary Response and Auditor's Comments to Agency
Preliminary Response

105

Finding 14 Agency Preliminary Response and Auditor's Comments to Agency
Preliminary Response

107

Agency Description

110

Audit Scope, Methodology, and Other Information

111

Glossary of Abbreviations and Terms

119

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AUDIT OBJECTIVES, CONCLUSIONS,
FINDINGS, AND OBSERVATIONS

Michigan Office of the Auditor General
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PROCESSING UI CLAIMS IN ACCORDANCE WITH SELECTED STATE
AND FEDERAL REQUIREMENTS DURING THE COVID-19 PANDEMIC
BACKGROUND

To slow the spread of COVID-19* after the first confirmed cases in
Michigan in March 2020, the Governor declared a state of
emergency and issued a series of executive orders (EOs) placing
restrictions on public gatherings. These orders temporarily closed
schools, businesses, and other employers resulting in the largest
spike in unemployment in Michigan history, which peaked at
23.6% in April 2020.
The Coronavirus Aid, Relief, and Economic Security (CARES)
Act, effective March 27, 2020, created several new federally
funded pandemic unemployment compensation (UC) programs,
including:
•
•
•

Pandemic Emergency Unemployment Compensation
(PEUC)
Pandemic Unemployment Assistance (PUA)
Pandemic Unemployment Compensation* (PUC)

The Consolidated Appropriations Act (CAA) and the American
Rescue Plan Act (ARPA), effective December 27, 2020 and
March 11, 2021, respectively, continued these federally funded
pandemic programs through September 6, 2021. See Exhibit 1
for additional information on these and other programs.
The PUA program differed from other UC programs in that it
covered individuals not traditionally eligible for unemployment
insurance (UI) benefits, such as the self-employed, independent
contractors, and others. The CARES Act and U.S. Department of
Labor Employment Training Administration (USDOL ETA)
Unemployment Insurance Program Letters (UIPLs) established
eligibility and administrative requirements for PUA. Because most
PUA claimants did not have wage records on file with the
Unemployment Insurance Agency (UIA), eligibility was based on
self-attestation they were unemployed, partially unemployed, or
unable or unavailable to work because of one or more of the
eligibility reasons included in the CARES Act and related UIPLs.
Because of the uniqueness of the PUA program, UIA had to
develop, implement, and program the Michigan Integrated Data
Automated System* (MiDAS) with new forms and controls for
administering the program, including a new application, weekly
benefit certifications, fact-finding forms, monetary determinations,
and other items at the onset of and during the COVID-19
pandemic. UIA acknowledged challenges in standing up this new
program in its response to a finding related to ensuring claimant

* See glossary at end of report for definition.
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eligibility. This was included in the single audit report on the
Unemployment Compensation Fund for fiscal year ended
September 30, 2020. UIA stated:
The Agency's existing policies and procedures, for the
most part, did not adequately cover the PUA program which is not a traditional UI program. For PUA, the
Agency was essentially implementing an entirely new
unemployment program - in the middle of the pandemic.
Although states were expected to utilize current UI
systems, several elements that support controls for UI
(i.e.: covered wages and employment verification) were
not a requirement for PUA.
We previously reported on UIA's control environment related to
the administration of the PUA program in Finding 1 of our
November 2021 performance audit* report, Establishing
Pandemic Unemployment Assistance Eligibility Criteria
(186-0319-21A), located at audgen.michigan.gov/wpcontent/uploads/2021/11/r186031921A-8294.pdf. In addition, in
Finding 6 of our May 2022 performance audit report, Michigan
Integrated Data Automated System and Michigan Web Account
Manager* (MiWAM) - Selected General and Application Controls
(186-0593-21), located at audgen.michigan.gov/wpcontent/uploads/2022/05/ r186059321-8235.pdf, we reported UIA,
in conjunction with the Department of Technology, Management,
and Budget (DTMB), did not fully implement effective change
controls over MiDAS and MiWAM applications and data to ensure
all system changes were authorized and operating as intended
before implementation. Many of the findings with UIA's
administration of UC programs included within this report directly
or indirectly resulted from internal control* weaknesses identified
in these prior reports.
According to a May 2021 USDOL Office of Inspector General
(OIG) report, many states, including Michigan, struggled to stand
up and administer their PUA programs. A September 2022 OIG
report, which included an in-depth review of Michigan and three
other states, noted all three prioritized payment expediency over
safeguards and suspended their eligibility and payment controls.
The report also acknowledged that guidance, issued by the
federal Office of Management and Budget on April 10, 2020,
required states to prioritize expediency, defined as the rapid
issuance of awards to meet crucial needs, but also reminded
states to balance the need for expediency with steps to mitigate
fraud, waste, abuse, and improper payments.
By May 2020, UIA was aware of potentially significant exposure to
fraud, including imposter fraud* and intentional
misrepresentation*. In response, the Department of Labor and
Economic Opportunity (LEO) contracted with Deloitte to lead a
cybersecurity and forensics assessment and a review of UIA's
efforts to balance expedient payment with program integrity.
* See glossary at end of report for definition.
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Deloitte provided a forensic report in November 2020 and a fraud
measurement estimation report in December 2021. LEO released
both reports publicly. As noted in Findings 1 and 4, the
opportunity still exists for UIA to attempt to identify and recover
overpayments caused by claimant intentional misrepresentation
and grant waivers for overpayments caused by agency error.
We identified various conditions that likely resulted in significant
UC benefit overpayments. When appropriate, we estimated the
total dollar amount of overpayments associated with each
condition. Because many of the issues in this report involving the
PUA program were not mutually exclusive in terms of the
population of claims, there is likely significant overlap between
some of our estimates. Exhibit 2 shows the total UC benefit
claims and payments by program which UIA made to claimants
for weeks ended from January 4, 2020 through October 2, 2021.
Exhibits 3 through 6 provide information related to total UC
benefits Michigan and other states paid during the COVID-19
pandemic and show Michigan was among the highest and longest
UC benefit payers both nationally and within USDOL Region 5. In
addition, Exhibit 7 provides information on benefit overpayments
from January 1, 2020 through June 30, 2022.
AUDIT OBJECTIVE

To assess the effectiveness* of UIA's efforts to process UI claims
in accordance with selected State and federal requirements
during the COVID-19 pandemic.

CONCLUSION

Not effective.

FACTORS
IMPACTING
CONCLUSION

•

Nine material conditions* related to UIA's claims processing
efforts during the COVID-19 pandemic (Findings 1 through 9).

•

Three reportable conditions* related to UIA's claims
processing efforts during the COVID-19 pandemic (Findings
10 through 12).

•

Two observations* related to opportunities to improve claims
processing (Observations 1 and 2).

•

UIA appropriately administered the Work Share program
based on our review of 80 randomly selected Work Share
claims.

•

UIA correctly denied or otherwise precluded payment on
79 (98.8%) of 80 randomly selected unpaid claims we
reviewed.

* See glossary at end of report for definition.
Michigan Office of the Auditor General
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FINDING 1
Intentional
misrepresentation on
PUA claims not
established.
UIA may miss the
opportunity to
investigate and
identify billions of
dollars in existing
overpayments as
potentially fraudulent.

UIA did not investigate potentially misleading or inaccurate
information provided by PUA claimants to identify benefit
overpayments or determine when PUA benefit overpayments
resulted from claimant intentional misrepresentation. Therefore,
UIA may miss the opportunity to investigate and identify a
significant dollar amount of potentially fraudulent PUA
overpayments.
UIA Manual Section 7930 defines intentional misrepresentation as
"an act of willful misrepresentation or nondisclosure of a material
fact for the purpose of obtaining benefits to which the claimant is
not entitled or preventing benefit payments where an individual is
entitled." In addition, it requires UIA staff to notify claimants when
information they provided to UIA conflicts with information UIA
received from another source and to conduct additional
fact-finding activities to establish the correct information. For UC
benefit programs other than PUA, when UIA received conflicting
information on a claim, UIA had programmed MiDAS to allow for a
protocol that included stopping payments on the claim, creating
an applicable nonmonetary issue, establishing overpayments
when applicable, and sending fact-finding questionnaires to
resolve the conflict and potential intentional misrepresentation.
Section 62(a) of the Michigan Employment Security (MES) Act
prohibits UIA from issuing a determination of intentional
misrepresentation more than three years from the date of any
related improperly paid benefits.
Although the CARES Act established claimant self-attestation as
the basis for PUA eligibility, UIPL No. 16-20, Change 2, issued
July 21, 2020, authorized UIA to request supporting
documentation from a claimant when it had a reasonable
suspicion the claimant provided fraudulent information on a PUA
claim. In addition, UIA Manual Section 6637 requires UIA to
consider whether overpayments resulted from claimant
misrepresentation. Further, UIA issued guidance to staff in
October 2020 requiring them to issue a secondary intentional
misrepresentation determination, as appropriate, when reviewing
claimant eligibility issues related to an overpayment. Our review
determined:
a. UIA e-mails from the beginning of the COVID-19 pandemic
indicated the then UIA director instructed staff not to find
fraud against claimants. Also, until their resignation in
early November 2020, e-mails show the UIA director
instructed staff not to question PUA claimants' selfattestations because they believed UIA lacked the
authority to do so. In addition, e-mails show UIA senior
managers disagreed with this instruction.
b. UIA did not program MiDAS to ensure it followed its
misrepresentation identification protocol when it
established overpayments on PUA claims, including
sending fact-finding requests to claimants to determine the
cause for the overpayment(s). When denying a paid PUA

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claim and establishing overpayments for all benefit weeks,
UIA programmed MiDAS to automatically create and close
a misrepresentation nonmonetary issue without
investigation or adjudication.
c. UIA did not address other MiDAS programming
deficiencies which its staff informed us limited their ability
to create nonmonetary issues when UIA had a reasonable
suspicion of fraud, confirm intentional misrepresentation
and issue redeterminations*, establish overpayments, and
prevent additional payments on PUA claims. This
included claims UIA had previously confirmed as
fraudulent after a fraud investigation or learned were
potentially fraudulent subsequent to initial improper
adjudication. E-mails show UIA discussed these MiDAS
programming deficiencies in September 2020 and possibly
earlier.
UIA established at
least $6.6 billion in
PUA claim
overpayments.

UIA established at least $6.6 billion in overpayments for PUA
claims (PUA and associated PUC and Lost Wages Assistance
[LWA] program benefits) and identified various conditions with the
claims which should have triggered its intentional
misrepresentation protocol to determine the cause of the
overpayments. See Exhibit 7 for UIA's established overpayments
by UC program from January 1, 2020 through June 30, 2022.
The various conditions included paying PUA claimants who:
•

Had no apparent recent attachment to the Michigan
workforce (see Finding 5).

•

Could not provide or provided UIA with conflicting
employment and/or identity verification documentation
(see Finding 5).

•

Did not report the wages they earned while collecting UC
benefits (see Finding 8).

•

Were potentially eligible for an overpayment waiver
because of agency error but had other open nonmonetary
issues including potential fraud (see Finding 4).

In addition, we reviewed information in MiDAS for 60 randomly
selected PUA claims to determine if the claimants appeared to
meet the program eligibility requirements based upon their selfattestations. We noted 20 (33.3%) claims in which the claimant's
self-attested eligibility reasons were reasonably suspicious and
should have warranted a request for supporting documentation
from the claimant. Suspicious conditions included those
mentioned in the bullets above and others.
UIA informed us the opportunities it missed to properly program
MiDAS and the former director's instructions precluded it from

* See glossary at end of report for definition.
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UIA confirmed
intentional
misrepresentation on
only 28 PUA claims,
although billions of
dollars in
overpayments
occurred.

taking action to determine the cause for the PUA overpayments,
to follow up on PUA claims for which it had a reasonable
suspicion of fraud, and to determine whether the claimants meet
the PUA eligibility requirements based on their self-attestation
and, if not, if intentional misrepresentation was involved. In
December 2021, Deloitte estimated UIA paid billions of dollars in
fraudulent UC payments because of intentional
misrepresentation, after reviewing nearly 15,000 UC claims,
including PUA claims. However, UIA informed us it had not taken
any action to confirm the suspected fraudulent claims identified by
Deloitte were indeed fraudulent and to recover the associated
overpayments. As of March 2022, UIA determined intentional
misrepresentation on only 28 PUA claims totaling approximately
$342,000.
UIA informed us as of August 2022, it was in the process of
making the necessary changes to MiDAS to confirm intentional
misrepresentation on PUA claims. UIA stated until these changes
are completed, it has no way to establish intentional
misrepresentation and issue related nonmonetary
redeterminations. UIA explained that even a manual case-bycase review outside of MiDAS would be impractical and
potentially hindered by UIA's previous actions with these claims.
The three-year window for UIA to confirm intentional
misrepresentation for the PUA overpayments starts to close in
April 2023.
We consider this finding to be a material condition because of the
significant number of PUA claimants UIA has not contacted to
establish the cause of their overpayments, UIA's failure to take
timely and appropriate action to address the MiDAS programming
deficiencies, and UIA's inability to establish and collect on
overpayments for which it had not timely established
overpayments. In addition, not confirming intentional
misrepresentation on PUA overpayments has likely resulted in
UIA granting waivers to claimants who submitted fraudulent PUA
claims (see Finding 4).

RECOMMENDATION

We recommend that UIA investigate potentially misleading or
inaccurate information provided by PUA claimants to identify
benefit overpayments and determine when PUA benefit
overpayments resulted from claimant intentional
misrepresentation before the three-year window to do so on these
claims closes.

AGENCY
PRELIMINARY
RESPONSE

UIA partially agrees with the Finding. Given the length of its
preliminary response, the response and our auditor's comments
are presented on page 80.

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FINDING 2
UIA needs to
consistently apply its
fraud controls.

UIA temporarily reassigned its Investigations Division (ID) staff
and removed many of its business rules from its automated fraud
detection and prevention controls at the onset of the COVID-19
pandemic.
Although these actions allowed for more staff to assist with claims
processing and more expedient payments to claimants, they did
not align with USDOL guidance and significantly diminished UIA's
ability to help ensure UI program integrity. In a December 2021
report, Deloitte estimated $2.7 billion (9.5%) of $28.3 billion in
total benefits UIA paid for claims filed from March 1, 2020 through
October 2, 2020 likely involved imposters. UIA's fraud controls
would likely have flagged and prevented at least some portion of
these claims. Conversely, Deloitte estimated less than 0.5% of
the $6.2 billion in total benefits paid for claims filed from
October 3, 2020 through September 30, 2021, which was after
UIA reinstated its fraud controls, likely involved imposters.
UIPL No. 19-11 calls on all states to ensure UI integrity is a top
priority and develop state specific strategies to bring down the UI
improper payment rate and help to create and cultivate a culture
of integrity throughout the entire UI system. Also, the UIPL states
the best way to effectively reduce an improper payment rate is to
prevent improper payments before they occur. In addition, it
states integrity programs must be designed to discourage fraud
and uncover potential issues of fraud at the earliest possible time.
USDOL issued UIPL No. 16-20 on April 5, 2020, and several
other UIPLs thereafter, which reminded states of the importance
of program integrity and required them to take reasonable and
customary precautions to deter and detect fraud. UIA developed
and implemented its Fraud Manager software in 2018, which
scans claims at filing and certification to identify questionable
claims requiring further review. Rather than maintaining or
enhancing its fraud detection efforts at the onset of the pandemic,
UIA considerably weakened them. Specifically, we noted:

UIA reassigned the ID
administrator and staff
to a special project
within LEO and other
work within UIA
resulting in limited
oversight of Fraud
Manager.

Michigan Office of the Auditor General
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a. On March 30, 2020, UIA's former deputy director, at the
direction of the then UIA director, reassigned the ID
administrator to a special project involving data analytics
for LEO and the 76 ID staff to other work within UIA. This
action resulted in limited oversight of Fraud Manager and
limited staff to investigate suspected fraudulent claims
identified by Fraud Manager, referral, or other means.
b. On March 31, 2020, UIA disabled its customary first
payment review holds on newly filed regular UI claims.
When used, this fraud prevention tool delays payment on
new claims for 10 business days to allow claimants' prior
employers to protest claimants' monetary determinations
and separation reasons, as warranted.

UIA stated it took this action to expedite benefit payments
and because it believed many employers would be
unavailable to timely respond to UIA requests when they
were closed by the Governor's EO, which prohibited inperson work for nonessential businesses.
Although the Governor lifted the stay-at-home order for
various industries beginning May 1, 2020, and for all
employers by June 1, 2020, UIA did not reestablish the
first payment review hold until September 24, 2020. UIA
made 1.1 million first payments totaling $2.0 billion on
regular UI claims while the first payment review hold was
inactive.
UIA's former director
requested all but one
of the rules used by
Fraud Manager to
identify and stop
payment on
potentially fraudulent
claims to be
temporarily
suspended.

c. On April 13, 2020, UIA's former director requested all but
one of the rules used by Fraud Manager to identify and
stop payment on potentially fraudulent claims be
temporarily suspended. This included rules to identify
claimants using blacklisted e-mail domains and/or
blacklisted IP addresses; claimants with out-of-state
addresses; multiple claimants using the same information,
including bank account, IP address, and physical address;
and other conditions closely correlated with fraud,
including the distance between the IP address and
physical address.
UIA informed us it was under pressure from various
places, including the Legislature, to quickly process and
pay unemployment claims.

A sequencing error
allowed new claims to
be processed and
paid before going
through Fraud
Manager. UIA made
first payments totaling
$3.2 billion during this
time.

d. From March 31, 2020 through May 19, 2020, UIA made
4.0 million payments totaling $6.3 billion, including
1.5 million first payments totaling $3.2 billion, for regular UI
and PUA claims. Although Fraud Manager screened the
claim information, it was after UIA made the payments,
thus rendering the screening ineffective at preventing
potentially fraudulent payments. According to Deloitte's
November 2020 report, when UIA disabled its first
payment review hold (part b.), this change led to a
sequencing error which allowed new claims to be
processed and paid before going through what remained
of Fraud Manager, and UIA did not identify this
sequencing error during post implementation testing.
On May 22, 2020, the former director moved the ID administrator
back to their original position, began reassigning staff back to the
ID, and began approving staff to program rules back into Fraud
Manager. UIA reinstated Fraud Manager by June 29, 2020.
However, as noted in Deloitte's November 2020 report, several of
the controls did not initially work as intended, including the
controls related to the out-of-state addresses. UIA continued to
address programming issues with Fraud Manager until at least

Michigan Office of the Auditor General
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September 2020. We noted $26.2 billion (92.5%) of the
$28.3 billion previously noted related to claims filed by June 29,
2020.
We consider this finding to be a material condition because of the
significant number of fraudulent UC benefit payments UIA may
have prevented. This policy decision and others depicted in this
report reflected an overall poor tone at the top that significantly
hindered UIA's ability to ensure the integrity of and effectively
administer the new federal programs at the onset of the
pandemic.
RECOMMENDATION

We recommend that UIA consistently administer fraud detection
and prevention controls to help ensure the integrity of its UI
programs.

AGENCY
PRELIMINARY
RESPONSE

UIA and LEO agree with the Finding. Given the length of their
preliminary response, the response and our auditor's comments
are presented on page 82.

Michigan Office of the Auditor General
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FINDING 3
Improvement needed
to ensure claimants
meet federal eligibility
criteria.

UIA paid $8.3 billion
in PUA claims without
requiring claimants to
certify they met
federal eligibility
criteria.

UIA made improper
payments totaling at
least $1.7 billion to
claimants who
selected only 1 or
more of 5 invalid
eligibility criteria.

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UIA did not require some PUA claimants to certify they met
federal eligibility criteria for those benefits and, therefore, UIA
could not support the appropriateness of PUA payments of
$10.2 billion.
The CARES Act and UIPL No. 16-20 contained a combined total
of 11 COVID-19 related eligibility criteria for the PUA program.
UIPL No. 16-20, Change 5, added 3 COVID-19 related eligibility
criteria in February 2021. To qualify for PUA benefits, claimants
had to certify they met at least 1 of the 14 criteria when applying
for program benefits and each week thereafter when claiming
PUA benefits. Our review disclosed:
a. UIA paid $8.3 billion in PUA claims for benefit weeks
ended February 8, 2020 through June 27, 2020 without
requiring claimants to certify they met 1 of the 11 (at that
time) federal eligibility criteria, because UIA did not include
the criteria on its weekly continued claim certification form
during this period. Based on these claimants' original
applications, which preceded the weekly certifications
required to establish eligibility for payment, claimants
selected 1 of 5 invalid reasons UIA erroneously included
on the original application, without selecting a valid
eligibility criterion. This resulted in improper payments
totaling $3.0 billion (36.6%) of the $8.3 billion. UIA
provided the claimants who selected 1 of 5 invalid reasons
on their application the opportunity to requalify to 1 of the
14 (at that time) valid COVID-19 eligibility criteria in
summer 2021 (see Finding 4). We did not obtain data
from UIA to determine how many applicants requalified
with a valid criterion. UIA did not require claimants who
had not certified to any criteria for the benefit weeks ended
February 8, 2020 through June 27, 2020 to retroactively
certify for those weeks.
We reported this issue in Finding 2 of our November 2021
performance audit report on Establishing Pandemic
Unemployment Assistance Eligibility Criteria (186-031921A). However, during our fieldwork for that audit, UIA
had not yet provided data we requested to quantify the
potentially improper benefit payment amount for the entire
population of affected claimants. In addition to the 4
unauthorized criteria noted in Finding 2 of our report, UIA
modified the CARES Act criteria for self-employed
individuals, making it also invalid.
b. UIA made improper payments totaling at least $1.7 billion
to claimants who selected 1 or more of 5 invalid eligibility
criteria UIA included in its weekly certification forms but
none of the 11 (at that time) valid federal eligibility criteria
for benefit weeks ended July 4, 2020 through February 27,
2021. We cited this condition in Finding 2 of our audit
report mentioned in part a., and UIA had not provided
requested data at that time to allow us to quantify the
improper payment amount. UIA provided these claimants
21

the opportunity to requalify or recertify to one of the 14 (at
that time) valid COVID-19 eligibility criteria in summer
2021. The $1.7 billion in improper payments is
independent of those claimants who recertified to a valid
COVID-19 eligibility criteria for these benefit weeks.
c. UIA paid $70.2 million to claimants who certified they did
not meet any of the 14 federal eligibility criteria or UIA's 5
invalid eligibility criteria on 134,779 weekly certifications
filed for benefit weeks ended July 4, 2020 through
September 4, 2021. Also, UIA paid at least $25.1 million
to claimants who certified they were eligible for PUA
benefits for a reason other than the 14 federal eligibility
criteria or UIA's 5 invalid eligibility criteria on 54,887
weekly certifications filed for the same period. When
claimants certified in either of these ways, they were
prompted to answer additional questions that UIA
adjudicators had to manually review to determine if the
claimants' responses showed the claimants met at least
one of the federal eligibility criteria for each of the week(s)
in question. Rather than working with its MiDAS vendor to
create a nonmonetary eligibility issue for this specific issue
(because one did not exist within existing MiDAS
functionality for PUA claims), UIA used an existing
nonmonetary issue related to the claimants' availability for
work which may or may not have been applicable. We
randomly sampled and reviewed 25 and 30 weekly
certifications from each of the identified populations,
respectively, and noted UIA did not identify or document in
MiDAS which of the valid eligibility criteria 22 (88.0%) and
26 (86.7%) claimants met that qualified them for benefits.
Consequently, we estimate UIA made improper PUA
benefit payments totaling $64.3 million and $22.4 million
from each of the populations, respectively. Our detailed
examination of the 55 weekly certifications disclosed:
(1) UIA staff inappropriately adjudicated the eligibility
issues associated with 11 (20.0%) weekly
certifications as claimant availability issues. This
was likely caused by UIA incorrectly identifying the
issues in MiDAS as availability issues. UIA
informed us it did not train or otherwise provide
written instructions to adjudicators to correctly
identify and adjudicate these issues.
(2) UIA staff did not create notes in MiDAS supporting
their adjudications on 27 (49.1%) weekly
certifications and there was no evidence in the
certifications or MiDAS showing the claimants met
any of the 14 federal eligibility criteria. Also, UIA
staff did not document in their notes which of the

Michigan Office of the Auditor General
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14 federal eligibility criteria claimants met to
support adjudications for 2 (3.6%) other weekly
certifications. UIA informed us that after
performing any action on a claimant account, staff
must leave a note detailing what they did and why
they did it. As discussed in part c.(1), it is possible
UIA staff inappropriately adjudicated many of these
eligibility issues as availability issues.
(3) UIA did not require claimants to answer
certification questions to establish their benefit
eligibility on 3 (5.5%) weekly certifications. The
questions were originally related to claims against
another UC program with different eligibility criteria
and 3 (5.5%) certifications for then non-current
benefit weeks the claimants had earlier declined to
certify for.
(4) UIA staff properly adjudicated that the claimants
associated with 3 (5.5%) certifications were not
eligible for PUA benefits for the applicable weeks,
but they failed to take the necessary action in
MiDAS to stop the payments from being made.
USDOL issued
updated guidance in
August 2020 stating
claimants whose
children had the
option to attend inperson classes were
ineligible for PUA;
however, UIA did not
update its weekly
benefit certification
form until more than
six months later.

d. UIA paid up to $163.3 million in payments to claimants
who selected an eligibility reason related to their children
without requiring them to certify their children had no
option to attend school in person, facility care for a child
was required for the claimant to work and their care facility
was closed, or without properly adjudicating the claimant's
responses when necessary. Although USDOL issued
updated guidance in August 2020 prior to the beginning of
a typical school year stating claimants whose children had
the option to attend in-person classes were ineligible for
PUA, UIA did not update its weekly benefit certification
form until more than six months later, and it may not have
properly adjudicated claimant responses to related
questions after the update because of reasons mentioned
in part c.
UIA informed us it bypassed established procedures requiring
approvals from key UIA personnel when developing its PUA
certifications because of the urgency to make them available in
response to the COVID-19 pandemic.
We consider this finding to be a material condition because of the
significant dollar amount of benefits paid to ineligible and
potentially ineligible claimants and the significant impact on the
overall integrity of the PUA payments.

Michigan Office of the Auditor General
186-0319-21

RECOMMENDATION

We recommend that UIA accurately determine claimant eligibility
for UC benefits in accordance with the requirements associated
with each UC program.

AGENCY
PRELIMINARY
RESPONSE

UIA and LEO agree with the Finding. Given the length of their
preliminary response, the response and our auditor's comments
are presented on page 85.

Michigan Office of the Auditor General
186-0319-21

FINDING 4

UIA should improve its administration of PUA requalification,
recertification, and overpayment waiver processes.

Improvements needed
to UIA's PUA
requalification,
recertification, and
overpayment waiver
processes.

Improved administration will help UIA ensure it:
•

Accurately identifies claimants it incorrectly paid PUA
benefits who are eligible for an overpayment waiver and
those who should repay the benefits.

•

Calculates overpayment waiver amounts and grants
overpayment waivers in accordance with statute and
USDOL guidance.

•

Appropriately communicates with potential waiver
recipients.

We estimate UIA may have improperly granted $1.7 billion in
overpayment waivers and did not consider waivers for claims
totaling $280.7 million that met its waiver criteria.

UIA established at
least $5.2 billion in
overpayments for the
$10.4 billion paid to
the associated
650,000 PUA
claimants.

As noted in Finding 3, UIA included 5 unauthorized criteria in its
initial PUA application and weekly benefit certification forms. To
ensure PUA benefits only went to claimants meeting at least one
of the federally specified criteria, USDOL required UIA to
re-evaluate affected claimants' PUA eligibility. Consequently, in
June 2021, UIA asked nearly 650,000 PUA claimants to requalify
and/or recertify, as applicable, using the specific federal criteria
only. As of October 2021, UIA had paid these claimants a total of
$10.4 billion, most of which it had paid prior to UIA's
requalification and recertification efforts. UIA established
overpayments totaling at least $5.2 billion, most of which resulted
from the requalification and recertification process.
In July 2021, UIA began a process to waive the overpayments it
caused by using the unauthorized criteria. UIA's methodology to
identify claimants eligible for overpayment waivers included
programming MiDAS with broad criteria based primarily on if they
had selected one or more of the 5 unauthorized criteria.
Generally, the 331,800 claimants granted these waivers, which
totaled $3.7 billion, were PUA claimants who did not respond to
UIA's requalification or recertification request or responded to the
requests without selecting an eligible reason and did not have a
previously identified overpayment associated with their specific
claims. UIA's methodology did not always consider previous
adjudications or other potential eligibility issues with the claims.

33.3% of the
claimants granted
overpayment waivers
had open eligibility
issues at the time of
the waiver.

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186-0319-21

We reviewed 60 of these waivers totaling $677,000 and
determined:
a. UIA automatically closed and discarded one or more open
claimant eligibility issues without review and potential
adjudication on 20 (33.3%) claims granted overpayment
waivers totaling $312,400. The issues included, but were
not limited to, potential fraud; employment, income, and

identity verification; and claimant availability for work. By
closing these issues without review and adjudication,
when applicable, UIA likely missed opportunities to identify
imposter claims, claimants misrepresenting their
attachment to the workforce, and other issues that should
have resulted in UIA enforcing repayment and pursuing
fraud investigations, when necessary. Assuming a
comparable rate of occurrence exists in the waiver
population, we estimate UIA may have granted waivers
totaling $1.7 billion for claims with similar open eligibility
issues.
b. UIA granted 2 (3.3%) overpayment waivers totaling
$12,000 without first considering the impact of previously
adjudicated employment-related eligibility issues that
found the claimants ineligible for PUA benefits. Also, UIA
did not rescind 3 (5.0%) overpayment waivers totaling
$14,600 after it subsequently identified employmentrelated claimant eligibility issues making them ineligible for
some of the overpaid benefits. In all 5 of these instances,
the claimants could not substantiate employment or
confirmed they had not been employed in 2019 or 2020
and, therefore, may not be eligible for the overpayment
waivers because of potential intentional misrepresentation.
Assuming a comparable rate of occurrence exists in the
waiver population, we estimate $147.0 million of the
overpayment waivers may relate to claims with confirmed
eligibility issues unrelated to agency error.
UIA did not consider
open or previously
adjudicated benefit
eligibility issues when
identifying
overpayments and
related waivers
because it believed its
error of including the
unauthorized criteria
made all other issues
irrelevant.

UIA informed us it did not consider open or previously
adjudicated benefit eligibility issues when identifying
overpayments and related waivers because it believed its
error of including the unauthorized criteria made all other
issues irrelevant. However, the selection of the COVID-19
reason was only one of several PUA eligibility criteria,
which the claimant certified as accurate under penalty of
fraud. For example, claimants' employment which led to
their unemployment had to have occurred in Michigan;
claimants had to be able and available for work except for
their COVID-19 reason; and claimants had to have worked
and earned income that was reported to them on a federal
1099 or W-2 tax form, had earned wages in selfemployment, or could provide proof for a planned start of a
new job. Failure to meet any of these or other eligibility
criteria or to provide false information or withhold relevant
information would make them ineligible for PUA benefits,
as would overreporting their income to obtain a higher
weekly benefit amount (WBA).
UIPLs No. 20-21 and 20-21, Change 1, permit a State to
grant an overpayment waiver only when the affected
claimant was not at fault for the overpayment and preclude
granting waivers on overpayments involving claimant fraud
or intentional misrepresentation. The MES Act contains

Michigan Office of the Auditor General
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similar waiver allowances and prohibitions. UIA's waiver
granting methodology, which included granting waivers to
claimants who did not respond to UIA's only request for
requalification and/or recertification and did not always
consider other eligibility issues including potential fraud,
did not always comply with these requirements. UIA
informed us it did not seek USDOL guidance on the
appropriateness of its methodology.
c. UIA overstated 7 (11.7%) overpayments and related
waivers by a total of $25,600 by erroneously including the
first benefit week of the claimants' ineligibility and all
subsequent weeks the claimant received benefits, which
mistakenly included some weeks the claimants' weekly
certifications made them eligible for PUA benefits.
Assuming a comparable rate of occurrence in the waiver
population, we estimate UIA may have overstated claimant
overpayments and related waivers by $141.2 million.
We also reviewed MiDAS claim data and documentation related
to UIA's requalification, recertification, and waiver processes and
noted:
d. UIA did not identify all claimants who needed to requalify
their overall PUA eligibility and/or recertify their eligibility
for one or more individual benefit weeks.
We identified 107,800
claims whose filers
selected only
unauthorized criteria
on their PUA
applications and/or
one or more weekly
benefit certifications
UIA did not ask to
requalify and/or
recertify, as
applicable.

We identified 107,800 claims whose filers selected only
unauthorized criteria on their PUA applications and/or one
or more weekly benefit certifications UIA did not ask to
requalify and/or recertify, as applicable. These claimants
received questionable payments totaling $200.7 million.
Also, we identified 34,800 claims whose filers selected
authorized reasons on their original PUA applications but
selected only unauthorized criteria when reopening their
applications after their original claims became inactive,
and UIA did not ask to requalify. These claimants
received payments totaling $80.0 million after they
reopened their claims.
UIA informed us it did not use the reasons from the
reopened applications to determine claimants' eligibility
going forward as it relied on the reasons provided on the
subsequent weekly benefit certifications instead.
However, this methodology was inconsistent with that
used for other claimants for whom UIA established
overpayments based only on reasons included on the
claimants' original applications.

Michigan Office of the Auditor General
186-0319-21

e. UIA did not accurately communicate the requalification
and recertification process to PUA claimants and UIA
employees.
UIA's June 2021
communication
identified only 4 of the
5 unauthorized
COVID-19 reasons
UIA included on the
PUA applications and
weekly certifications.

UIA's June 2021 communication identified only 4 of the 5
unauthorized COVID-19 reasons UIA included on the PUA
applications and weekly certifications. In addition, UIA's
Web site and public statements at the time of the waivers
mentioned only 4 of the 5 unauthorized criteria. However,
284,500 (43.8%) of the nearly 650,000 claimants UIA
asked to requalify and/or recertify selected a fifth reason
(self-employed) on their original PUA applications and/or
weekly certifications. UIA ultimately determined 145,400
(51.1%) of these 284,500 claimants were ineligible for and
overpaid benefits totaling $1.8 billion, which UIA then
waived. Based upon the results of our sample review,
most of these claimants did not respond to UIA's request.
It was not obvious UIA's request letter was applicable to
them.
The error in UIA's communication demonstrated apparent
confusion between UIA senior management who had
different understandings of the criteria UIA would use to
identify affected claimants. This was also evident during
our audit when UIA senior management incorrectly
explained it included only 4 of the unauthorized criteria to
identify affected claimants. We identified UIA included all
5 unauthorized criteria when it programmed MiDAS when
we reviewed the related programming language.
UIA publicly announced in early May 2022 it issued additional
overpayment waivers to approximately 55,000 claimants totaling
$431.0 million. However, we could not assess the
appropriateness of these waivers because UIA would not provide
us with information related to them. Although UIA informed us it
planned to complete the waiver process in July 2022 and provide
us with requested information at that time, it did not provide the
information to us.
We consider this finding to be a material condition because UIA's
unauthorized COVID-19 reasons directly impacted over 25% of all
UC benefits paid out from March 15, 2020 through June 30, 2022.
These benefits were entirely federally funded and it is important
UIA ensure only eligible claimants receive them and it only grant
overpayment waivers in strict adherence to USDOL directives and
other established requirements. Our review of overpayment
waivers only included the first round of waivers UIA granted, and
UIA has since granted additional overpayments and has indicated
it may consider additional waivers as well.

Michigan Office of the Auditor General
186-0319-21

RECOMMENDATIONS

We recommend that UIA improve its administration of PUA
requalification, recertification, and overpayment waiver processes.
We also recommend that UIA seek legal guidance from the
Department of Attorney General regarding its position contending
claimants who selected unauthorized criteria could not have
committed fraud.

AGENCY
PRELIMINARY
RESPONSE

Michigan Office of the Auditor General
186-0319-21

UIA and LEO partially agree with the Finding. Given the length of
their preliminary response, the response and our auditor's
comments are presented on page 87.

FINDING 5
UIA needs to ensure
claimants' prior
attachment to the
workforce.

UIA did not require or timely require 314,000 known PUA
claimants with no identifiable wages or recent income tax records
to provide additional information to demonstrate they had a
previous attachment to the workforce and were unemployed due
to the COVID-19 pandemic. UIA paid these claimants at least
$4.9 billion in PUA and associated PUC and LWA benefits
between April 2020 and September 2021, an average of $15,600
per claimant.
USDOL issued UIPL No. 16-20 on April 5, 2020, which promoted
the importance of program integrity and states' fundamental roles
in ensuring the integrity of the PUA program. The guidance
required states to ensure individuals only receive benefits in
accordance with statutory provisions. USDOL issued UIPL No.
16-20, Change 1, on April 27, 2020, which clarified PUA claimants
must have an attachment to the labor market and must have
experienced a loss of wages and hours or have been unable to
start employment following a bona fide job offer due to the
pandemic. In addition, USDOL issued UIPL No. 16-20, Change
2, on July 21, 2020, which indicated if a state has reasonable
suspicion of fraudulent activity on a claim, the state may request
supporting documentation to address the concern.

UIA management
began expressing
concerns to UIA and
LEO executive
leadership in April
2020 regarding the
risks associated with
the PUA population of
claimants.

As of November 2020,
UIA paid at least $3.3
billion to 314,000 PUA
claimants who had no
identifiable wage
records in MiDAS or
income tax records
with the Department
of Treasury.

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UIA issued guidance to its staff on how to proceed on claims with
reasonable suspicion of fraud in October and December 2020.
The December guidance stated an example would include
instances when the individual certifies their prior income or
employment on their initial claim and UIA cannot verify their
wages via the employer wage record in MiDAS or a crossmatch
with Department of Treasury income tax data. UIA advised its
staff this generally warrants reasonable suspicion when the
individual does not have a labor force attachment. In these
cases, a request that the claimant provide proof of prior income or
employment is typically warranted.
E-mails show UIA management began expressing concerns to
UIA and LEO executive leadership in April 2020 regarding the
risks associated with the PUA program's eligibility requirements.
UIA management repeated these concerns multiple times in the
early months of the pandemic and proposed alternative
approaches to ensuring program integrity, including forming a
task force to review all PUA claims. UIA did not implement the
proposals.
In late October 2020, LEO's contracted special fraud advisor and
another consultant requested UIA and LEO approve a crossmatch
between PUA claimants and the Department of Treasury income
tax records to "aid in our efforts to determine the extent of
potential fraud." At that time, only 13.7% of the PUA claimants
which UIA deemed eligible and paid based on their selfattestations had identifiable wages in MiDAS. UIA received the
results of the crossmatch in early November 2020, which
indicated UIA paid at least $3.3 billion in PUA and associated
PUC and LWA benefits to 314,000 (31.8%) PUA claimants who

had no identifiable wage records in MiDAS or income tax records
with the Department of Treasury.
E-mails show after receiving the results of the crossmatch, UIA
and LEO executive leadership, management, the special fraud
advisor, and representatives from a third consultant met to
discuss options on how to proceed. The table below includes the
options and impact of each option on active, inactive, and future
claimants, as depicted in documentation provided by the third
contracted consultant:

Option 1: Stay
the Course

Option 2: Update
Requirements for
Future Claimants

Option 3: Update
Requirements for
All Claimants

Option 4: Recover
Payments and Update
Requirements

Active claimants
(138,000)

No changes.

Require proof of
income for future
payment.

Require proof of
income and recover
payments (if needed).

Inactive claimants
(175,000)

No changes.

Require proof of
income and recover
payments (if needed).

Future/New claimants

No changes.

Require proof of
income.

E-mails between UIA
and LEO indicate
potential implications,
which included
economic and political
repercussions, of
finding the claimants
to be ineligible and
establishing
overpayments.

E-mails, Microsoft Teams messages, and other documentation
indicated UIA and LEO executive leadership and management
agreed to move forward with option 3 in November 2020. The
communications also indicated decisions on how to proceed with
a policy decision of the magnitude in this circumstance would
require approval from the Executive Office of the Governor. An
e-mail from LEO's then chief strategist to UIA and LEO executive
leadership communicated potential implications, which included
economic and political repercussions, of finding the claimants to
be ineligible and establishing overpayments. The e-mail also
stated the option of not making any changes was "not viable,
obviously." Although it appeared option 3 was chosen, UIA
ultimately did not take any immediate action to address the
crossmatch results. Neither UIA nor LEO executive leadership
could explain why.
The CAA, enacted on December 27, 2020, required all active
PUA claimants to provide employment verification (EV)
documentation supporting their previous employment or selfemployment within 90 days of UIA notifying them to do so. UIA
began requesting this documentation in February 2021.
Although UIA had previously established reasonable suspicion on
the 314,000 PUA claimants without identifiable income, it
continued to pay these PUA claimants until UIA staff reviewed the
EV documentation and responses provided by the claimants.
These reviews generally occurred between May and December
2021. By then, UIA had made additional payments totaling

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UIA staff did not
consistently apply EV
guidance when
establishing
overpayments on
PUA claims.

$1.5 billion to these claimants. UIA issued guidance for its staff to
deny PUA claims for claimants they determine were not employed
just prior to claiming benefits or who were unable to provide
evidence to rebut a reasonable suspicion of fraud. The guidance
also provided direction as to when UIA staff should deny an entire
PUA claim and when UIA should determine the claimant ineligible
and establish overpayments for paid benefit weeks ended
January 2, 2021 (the first benefit week after enactment of CAA)
and later.
We reviewed randomly selected samples of 110 paid PUA claims,
including 50 claims from the 314,000 PUA claimants noted above.
For the 110 claims, we reviewed the applicable PUA EV cases for
the 59 PUA claims active after the implementation of CAA and
noted UIA staff did not consistently apply its claims processing
guidance. Specifically:
a. UIA did not deny the entire claim for 8 claimants it
determined were not employed or self-employed prior to
claiming PUA. Instead, UIA only established
overpayments for benefit payments beginning the week
ended January 2, 2021 and thereafter. UIA paid these
claimants between $800 and $25,500 for weeks ended
prior to January 2, 2021, totaling $136,000.
b. UIA accepted insufficient documentation for EV, including
handwritten business receipts and incomplete Schedule C
tax form information, submitted by 6 claimants and did not
establish overpayments that should have ranged between
$8,300 and $34,200, totaling $104,100.
In addition, for one claim, UIA initially determined the
claimant's handwritten business receipts were not
sufficient for EV documentation and established
overpayments totaling $12,420. However, the claimant
protested and UIA reversed the determination even though
the claimant did not provide any additional EV
documentation.

UIA had flagged only
10 of these PUA
claimants for possible
intentional
misrepresentation.

As of November 2021, UIA established overpayments totaling
$2.3 billion (46.9%) for 172,000 (54.7%) of the claimants identified
in the Department of Treasury crossmatch for reasons including
EV and other eligibility issues. However, UIA flagged only 10 of
these PUA claimants for possible intentional misrepresentation,
which is key to initiating appropriate fraud investigation protocols
(see Finding 1).
We consider this finding to be a material condition because of the
significant amount of avoidable overpayments, UIA's lack of and
delayed action to address known risks concerning PUA claimants'
prior attachment to the workforce, and inconsistent establishment
of overpayments for PUA claimants.

Michigan Office of the Auditor General
186-0319-21

RECOMMENDATION

We recommend that UIA improve its processes to ensure it takes
timely and appropriate action to address claimant eligibility
concerns.

AGENCY
PRELIMINARY
RESPONSE

UIA and LEO agree with the Finding. Given the length of their
preliminary response, the response and our auditor's comments
are presented on page 93.

Michigan Office of the Auditor General
186-0319-21

FINDING 6
Improvements needed
to UIA's BPR process.

Some of the
managers UIA
assigned to respond
to the increased need
for BPRs did not have
experience
completing them or
adjudicating claims.

UIA did not ensure it completed or effectively completed benefit
payment reviews (BPRs) on high-risk payments. As a result, UIA
likely made payments it should have rejected, adjusted, or held
for additional information.
UIPL No. 23-20, issued by USDOL on May 11, 2020, reminded
states to maintain a steadfast focus on UI functions and activities
that ensure program integrity and detection of improper payments
and fraud across all UI programs. The UIPL also reminded states
to adhere to federal laws and guidance addressing program
eligibility requirements and each state's fundamental established
processes for ensuring accurate benefit payments. One of UIA's
fundamental processes is the BPR, which is a comprehensive
manual review of the UC claim. These reviews are completed by
UIA managers regarding the appropriateness of scheduled
payments UIA has flagged as high risk based on certain factors,
including the amount of and time frame covered by the payment.
The BPR results in the manager approving, denying, or adjusting
the scheduled payment or requesting additional information from
the claimant or other responsible party to make the appropriate
payment decision.
Prior to the COVID-19 pandemic, UIA programmed MiDAS to flag
for BPR scheduled benefit payments exceeding $3,000, which
equated to 9 weeks of UC benefits at the highest available WBA.
UIA explained that BPRs were relatively infrequent prior to the
pandemic and, consequently, only a few managers would
complete them. In April 2020, the new federal UC programs
significantly increased the highest available WBA and relaxed
claim backdating limitations, which together allowed for single
benefit payments exceeding $40,000. To respond to the
increased need for BPRs, UIA increased the number of managers
assigned to complete them. However, some of these managers
did not have experience completing BPRs or adjudicating claims.
UIA changed its BPR criteria multiple times during the pandemic.
E-mails show UIA's then director requested some of the changes
to reduce the volume of benefit payments being flagged for review
and to minimize claims payment delays. The changing criteria
resulted in UIA not consistently flagging benefit payments for a
BPR using sound risk-based criteria that aligned with changing
conditions during the pandemic. The following table reflects the

Michigan Office of the Auditor General
186-0319-21

changing criteria and the impact each change had on the number
of BPRs UIA completed:

Change
Start Date

Change
End Date

Prior to audit period
April 22, 2020
June 12, 2020

April 21, 2020
June 11, 2020
June 19, 2020

June 20, 2020
July 8, 2020

July 7, 2020
January 30, 2021

January 31, 2021

April 4, 2021

April 5, 2021

September 25, 2021

September 24, 2021

December 31, 2021

BPR Is Completed When
Scheduled payments on same day exceed $3,000.
Scheduled payments on same day exceed $11,000.
Scheduled payments on same day are for four or
more weeks of benefits.
Scheduled payments on same day exceed $11,000.
Claim has no prior payments and is backdated four
or more weeks.
UI, EB, PEUC, and other non-PUA programs Claim has no prior payments and is backdated
four or more weeks.

Total BPRs
Completed by
UIA Staff

Average
Per Day

1,237*
305
27,181

11*
6
3,883

1,576
91,009

93
442

61,253

972

PUA - Claim has no prior payments and is
backdated before December 26, 2020.
UI, EB, PEUC, and other non-PUA programs Claim has no prior payments and is backdated
four or more weeks.

116,687

678

PUA - Claim has no prior payments and is
backdated before February 1, 2021.
UI, EB, PEUC, and other non-PUA programs Claim has no prior payments and is backdated
four or more weeks.

24,651

254

PUA - Claim has no prior payments and is
backdated before August 22, 2021.
* From January 1, 2020 through April 21, 2020.

We reviewed UIA's implementation of these criteria and noted:
UIA increased the
threshold for benefit
payments needing a
BPR from $3,000 to
$11,000 even though
most could not have
reached the $11,000
threshold during that
time period.

a. UIA increased the threshold for benefit payments needing
a BPR from $3,000 to $11,000 for April 22, 2020 through
June 11, 2020. During that period, even when claimants
backdated their claims to the beginning of the pandemic
and were seeking the maximum benefit, most could not
have reached the $11,000 threshold. Although UIA made
5.5 million benefit payments totaling $9.6 billion during this
period, it completed a BPR on only 305 payments as a
result of this change. We noted UIA had already flagged
294 (96.4%) of these payments on April 21, 2020 before
increasing the threshold to $11,000.
b. Partly because of UIA changing the criteria after June 11,
2020, UIA paid over 16,500 individual benefit payments

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UIA paid over 16,500
individual benefit
payments ranging
from $11,000 to
$42,466 and totaling
$231.1 million without
a BPR.

ranging from $11,000 to $42,466 and totaling $231.1
million without a BPR. UIA excluded many of these
payments from BPR if it had previously made payments
for the claimants because UIA and its contract consultant
determined benefit payments for claimants who UIA had
previously paid were low risk. However, UIA had likely
paid the previous claims during the time it had essentially
eliminated fraud detection and prevention controls (see
Finding 2), had not required claimants to certify meeting
one of the authorized COVID-19 eligibility reasons for PUA
claims (see Finding 3), and included invalid COVID-19
eligibility reasons for PUA claims (see Finding 3). From
April 2020 to June 2020, UIA received 1,058,543 PUA
applications and made first payments on 852,926 (80.6%)
of those claims by the end of June 2020.
c. E-mails show UIA senior management discussed and
agreed to changing the BPR criteria to flag benefit
payments totaling four or more weeks in June 2020. This
change resulted in an influx of BPRs and created a
backlog of approximately 170,000 benefit payments held
for review. After one week, the former UIA director
requested a change back to the $11,000 benefit payment
threshold. As part of this change, UIA programmed
MiDAS to reject approximately 156,000 of the pending
BPRs for benefit payments under $11,000 and then
automatically approved new benefit payments for these
156,000 claims. In July 2020, UIA changed the criteria
back to flag new claims filed and backdated four or more
weeks. By this time, the greatest influx of claims had
passed.
d. UIA excluded benefit payments scheduled from April 5,
2021 through September 24, 2021 from BPR when they
were not backdated at least to February 1, 2021. Although
this criterion may have been reasonable early on when the
allowable number of backdated benefit weeks and
associated payments were relatively low, the criterion
became questionable as the number of allowable
backdated weeks grew from 9 to 33 by September 24,
2021 and the maximum payment approximated $22,000
(33 weeks at $362 WBA, plus $300 PUC). UIA informed
us it planned to update the February 1, 2021 backdating
date earlier in the cited period but did not because of other
priorities. In addition, had UIA kept the $11,000 threshold
when updating the BPR criteria for various backdating
scenarios, it could have still flagged significant dollar
amount payments for BPR while also flagging smaller
dollar amount payments deemed risky by UIA for
backdating reasons.
We reviewed claim documentation for the 5 highest benefit
payments made without a BPR between January 1, 2020 and

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December 31, 2021, ranging from $32,800 to $42,466, and
determined 4 (80.0%) payments had significant case complexities
that should have warranted managerial review before the
payment was released. For example, one claimant submitted a
note, purportedly from a prospective employer, stating they were
scheduled to start work on a specified date but did not end up
doing so because the business was temporarily closed because
of COVID-19. The note was printed on a plain piece of paper (not
business letterhead) and was unsigned by the preparer, calling
into question its authenticity.
In addition to the inconsistent and questionable criteria to flag a
claim for a BPR, UIA did not monitor managers to identify when
they were not spending sufficient time reviewing claim-specific
information. We noted:

Six managers
completed between
250 and 1,621 BPRs
per day on 46
different occasions.

e. From January 1, 2020 through December 31, 2021, UIA
managers occasionally completed significantly more BPRs
in a single day than realistically possible, assuming at
least some type of a cursory review of the details of each
claim. UIA informed us a BPR takes at least "several
minutes" to complete. If taking only 3 minutes per BPR,
managers working 8- and 12-hour shifts could complete
160 and 240 BPRs per day, respectively, without taking a
break. Our review disclosed 6 managers completed
between 250 and 1,621 BPRs per day on 46 different
occasions, approving 21,457 benefit payments totaling
$114.9 million. On June 14, 2020 (a Sunday), the
manager who completed 1,621 BPRs reported working 8
hours, averaging 17.8 seconds per BPR, with no break.
Despite an e-mail instructing the manager to complete a
thorough review of each payment, the manager stated
they were under the impression UIA deemed the
scheduled payments to be low risk and, therefore, thought
they only needed to approve the claims for payment
without performing any type of meaningful review. Other
managers we spoke with who completed at least 500
BPRs in a single day all stated they did not obtain any
training, guidance, or written instructions for completing
BPRs on PUA claims prior to conducting the BPRs. UIA
first provided written instructions to its managers related to
conducting BPRs on PUA claims in late July 2020, which
was after 34 of the 46 instances previously noted of
managers completing more than 250 BPRs per day. UIA
did not provide official guidance and training to its staff
related to adjudicating PUA claims until October 2020 and
conducting BPRs until December 2020, approximately 6
and 8 months, respectively, after the PUA program
started. Some stated they did not have any previous
experience completing BPRs or adjudicating claims. UIA
stated the former director delayed the issuance of formal
guidance to UIA managers related to how UIA should
adjudicate PUA claims because of disagreements

Michigan Office of the Auditor General
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on PUA eligibility between UIA senior managers and the
former director.
We reviewed claim documentation for the 5 largest
scheduled payments and 5 other scheduled payments
selected at random from BPRs approved during the week
ended June 19, 2020. We identified potential issues with
9 (90.0%) of the 10 scheduled payments that, if identified,
may have resulted in either payment rejection or reduction
or a request for additional information. Examples of issues
we identified in the sampled BPRs for the approved
payments included:
(1) Claimants backdating their claims prior to
March 15, 2020, which is when the initial COVID19 cases were confirmed in Michigan and the
Governor began issuing EOs related to the
pandemic.
(2) Questions related to prior employment separations,
including employer protests that UIA did not review
and consider prior to approving the BPR and other
separation issues prior to the pandemic.
(3) Claimants entering gross income rather than net
income, not providing sufficient documentation to
support the amounts, and submitting questionable
supporting documentation to increase their WBA
from the minimum of $160. In one example, the
claimant stated they earned $50,400 in selfemployment income and $50,400 in other income,
but only provided a photo of a handwritten piece of
paper as documentation, which stated, "Master
Barber" and the name of a barbershop.

A UIA manager
approved a BPR for a
payment of $6,840
purportedly to a
member of LEO's
executive leadership,
who likely was a
victim of identity theft.

Michigan Office of the Auditor General
186-0319-21

We found no evidence of a licensed barbershop
under the name provided in the Department of
Licensing and Regulatory Affairs' database and no
reported wages for this individual in the
Department of Treasury's tax records. Based upon
the total wages the claimant reported of $100,800,
UIA approved the claimant for a WBA of $362 and
any additional benefits, such as PUC ($300 to
$600, depending on the benefit week) and LWA
($300) for applicable benefit weeks.
In addition, we noted a UIA manager approved a BPR on
June 15, 2020 for a payment of $6,840 purportedly to a
member of LEO's executive leadership, who likely was a
victim of identity theft. Neither UIA nor LEO flagged this
claim as potential fraud until we brought it to UIA's
attention in January 2022.

We consider this finding to be a material condition because of the
high number of large payments paid to claimants without a BPR
and the ineffective BPRs completed. The conditions cited in this
finding are based on UIA's activities to expedite payments during
the pandemic. The opportunity for UIA to improve internal control
and ensure the integrity of benefit payments and detect improper
payments and fraud across all UI programs is relevant to UIA's
current and future operations.
RECOMMENDATION

We recommend that UIA improve its process for requiring and
conducting BPRs on high-risk payments.

AGENCY
PRELIMINARY
RESPONSE

UIA partially agrees with the Finding. Given the length of its
preliminary response, the response and our auditor's comments
are presented on page 95.

Michigan Office of the Auditor General
186-0319-21

FINDING 7
UIA needs to maintain
claimants' original
applications in MiDAS.

UIA did not maintain claimants' originally completed PUA
applications when it revised its PUA application forms and applied
the revisions to those applications in MiDAS.
Claimants' original applications construct the basis for UIA's
eligibility decisions, award amounts, and determinations and are
critical to ensuring the fair resolution of protests by claimants,
employers, and UIA and appeals within UIA, Michigan Office of
Administrative Hearings and Rules, Unemployment Insurance
Appeals Commission, and the courts. Failure to maintain the
original documents could significantly jeopardize UIA's position in
any related protests and appeals.
Title 20, Part 602B of the Code of Federal Regulations* (CFR)
requires UIA to keep a written record of the facts considered in
reaching its determinations. This would include the original
documents available to and used by claimants when filing their
benefit applications.
UIA created and began using its original PUA application in early
April 2020 and then revised it several times thereafter in response
to updated guidance and feedback from USDOL and to correct
errors. These revisions included changing income reporting
instructions from requiring total income to requiring net income
and rewording for some COVID-19 eligibility reasons. In addition
to making the revisions for use prospectively, UIA added,
removed, or changed information on already processed
applications in MiDAS related to instructions for providing proof of
income and documentation supporting base year employment;
eligibility reasons and time frames for being unemployed, working
reduced hours, and being able and available for work; and other
eligibility-related information.

PUA applications
appear in MiDAS as
though claimants had
not followed UIA's
instructions at the
time they submitted
income information.

Because UIA applied these revisions to processed applications
already in MiDAS, the applications appear as though the
claimants did not follow UIA's instructions, selected COVID-19
reasons that were worded differently from those they selected,
and did not answer questions which UIA had not included at the
time the claimant completed the application based on the time
and date stamp on the processed application.
UIA did not annotate on the completed applications or otherwise
communicate to the claims examiners or other potential users it
applied these changes to processed applications. In the event
the documents were needed to resolve protests or appeals, it
would not be obvious the documents had been altered. For
example, it appears UIA staff used the changed applications as
the basis for issuing redeterminations and establishing
overpayments related to higher WBAs it paid to claimants who
had reported total income rather than net income as requested on
their original applications. In these instances, the claimants may
be eligible for a waiver because the overpayment was not their
fault.

* See glossary at end of report for definition.
Michigan Office of the Auditor General
186-0319-21

UIA informed us it did not intend to apply its PUA application form
changes to already processed applications, and its postimplementation review process did not identify it had done so.
Although UIA informed us it should be able to restore the affected
applications back to their original state, as of August 2022, it had
not done so.
We consider this finding to be a material condition because UIA
materially altered some claimants' applications without
maintaining their original submissions.
RECOMMENDATION

We recommend that UIA maintain claimants' original applications
in MiDAS.

AGENCY
PRELIMINARY
RESPONSE

UIA provided us with the following response:
We agree UIA should maintain greater version control of all
claimant documentation in MiDAS. Constantly shifting federal
guidelines necessitated changes to policy and procedure.
Consequently, the application was revised several times during
the pandemic. These challenges placed a significant amount of
stress on MiDAS and staff. At no other period in recent history
did there ever need to be such rapid evolution of a program
during such a period of historic unemployment rates.
The pandemic presented real time challenges for which
Unemployment Insurance Agencies nationwide were ill prepared.
At the start of the pandemic, UIA, responded quickly and with
empathy to calls from both the legislature and claimants to get
payments out the door and into the accounts of Michigan workers.
The Michigan UIA was not alone in the challenges it faced.
However, Michigan is uniquely equipped to respond and rectify
these issues and has already begun the process of doing so.
The Benefits Division will submit an automation request to restore
the original PUA application.
UIA will be more vigilant in new program development to ensure
program eligibility and processes are clearly defined and align
with statute and USDOL guidance. Also, the affected divisions
will be consulted and will approve changes prior to
implementation. UIA will also practice effective internal controls
and ensure approvals are documented moving forward.

Michigan Office of the Auditor General
186-0319-21

FINDING 8
Wage crossmatch
leads require
follow-up.

UIA did not timely generate and follow up on leads from its
federally required quarterly wage crossmatches to identify and
recover UC benefit overpayments. This resulted in UIA not
identifying or timely identifying paid claimants who were not
unemployed or underemployed and, therefore, were ineligible for
some or all their UC benefits.
A claimant must be unemployed or underemployed to be eligible
for UC benefits. Federal regulation 20 CFR 603.23 requires state
UC agencies to crossmatch quarterly wage information with UC
payment information to the extent such information is likely, as
determined by the Secretary of Labor, to be productive in
identifying ineligibility for benefits and preventing or discovering
incorrect payments to claimants who may not have been
unemployed or underemployed.

Because of a
technical issue in
MiDAS, wage
crossmatch
nonmonetary issues
were not established
for each quarter.

UIA collects quarterly wage data from most Michigan employers.
UIA programmed MiDAS to conduct a wage crossmatch quarterly
using the wage and benefit payment data from two quarters
earlier and to generate leads identifying claimants who received
UC benefits for at least seven weeks and had significant wages
during the quarter. MiDAS then creates nonmonetary issues for
these leads and sends fact-finding forms to the applicable
claimants and employers requesting a weekly breakdown of the
wages earned during the quarter. When either or both parties fail
to respond, UIA policy requires adjudicators to call the parties and
request the information. The weekly wage breakdown is
necessary for UIA to determine if claimants had unreported
wages during the same weeks they received UC benefits, which
could make the claimant ineligible for some or all benefits during
those weeks and result in a determination of intentional or
unintentional misrepresentation against the claimant.
UIA informed us it conducted the required wage crossmatches
but, because of technical issues, MiDAS had been unable to
generate or fully generate leads since September 2019. The
following table depicts the number of nonmonetary issues created
from the wage crossmatches conducted during each quarter of
the audit period, as of March 2022:
Calendar
Year

Quarter

Number of Nonmonetary Issues
Created From Wage Crossmatch

2020

1
2
3
4

0
0
1,501
438

2021

1
2
3
4

122
0
457
823

2022

60,280

Total

Michigan Office of the Auditor General
186-0319-21

63,621

UIA created 94.7% of
the wage crossmatch
nonmonetary issues
during our audit
period beginning in
the first quarter of
2022.

As shown in the table, during the eight-quarter period ended
December 2021, UIA did not create any quarterly wage
crossmatch nonmonetary issues during three quarters and
created a total of only 3,341 quarterly wage crossmatch
nonmonetary issues over the entire period. In the first quarter of
2022, UIA created 60,280 quarterly wage crossmatch
nonmonetary issues, 59,404 of which it created after we inquired
with UIA about this issue. These 59,404 quarterly wage
crossmatch nonmonetary issues related to 49,780 unique claims
and were mostly for crossmatches missed during previous
quarters. UIA had paid these claimants a total of $552.6 million.
UIA informed us it restricted the number of wage crossmatch
nonmonetary issues it processed each week to either 250 or 500
based on available staffing. However, because of the backlog of
nonmonetary issues created in March 2022, UIA acknowledged it
would take months or years to process them all.
We reviewed 25 randomly selected nonmonetary issues
generated in March 2022 and determined UIA had only
adjudicated 1 (4.0%) of them as of October 2022, despite
receiving responses to UIA's fact-finding letters from 15
employers and 5 claimants related to 15 different issues. We
reviewed these responses and noted at least 8 claimants failed to
report earnings for weeks they received UC benefits, likely
resulting in the need for UIA to establish overpayment for those
weeks. UIA had not attempted to contact any of the
nonresponding claimants or employers. Timely identification and
follow-up of these leads is critically important because the MES
Act prohibits UIA from issuing new determinations on non-fraud
related issues and fraud related issues after one year and three
years, respectively. Consequently, UIA may have already missed
its opportunity to recover overpayments on some of these cases.
UIA stated it was aware of the technical issue within MiDAS
preventing it from fully conducting the wage crossmatches but did
not prioritize a fix because of the onset of the COVID-19
pandemic, expanded eligibility for UC, and the significant increase
in UC claims.
We consider this finding to be a material condition because of
UIA's delays in prioritizing corrective action to the technical issue
within MiDAS which prevented it from timely completing the
federally required crossmatch and the significant amount of
benefit overpayments have likely gone undetected, some of which
may no longer be recoverable.

RECOMMENDATION

Michigan Office of the Auditor General
186-0319-21

We recommend that UIA ensure the timely generation and follow
up on quarterly wage crossmatch leads to identify possible benefit
overpayments.

AGENCY
PRELIMINARY
RESPONSE

Michigan Office of the Auditor General
186-0319-21

UIA partially agrees with the Finding. Given the length of its
preliminary response, the response and our auditor's comments
are presented on page 98.

FINDING 9
Improvements needed
to ensure claimants
are able and available
for full-time work.

Being able and
available to work is a
fundamental
component of
eligibility. USDOL
stated specifically in
UIPL No. 13-20,
Change 1, that states
may not waive
eligibility requirements
in response to the
spread of COVID-19.

UIA did not consistently require UI, extended benefits (EB), and
PEUC claimants to certify they were able and available for
full-time work. As a result, UIA did not sufficiently mitigate the
risks of paying UC benefits to ineligible claimants.
Federal regulation 20 CFR 604 requires states to pay UC only to
individuals who are able and available for work during the weeks
they claim UC benefits. In addition, Section 421.28(1)(c) of the
Michigan Compiled Laws states individuals are eligible to receive
UC benefits only for weeks UIA finds the individuals are able and
available to perform suitable full-time work. Being able and
available to work is a fundamental component of UC eligibility.
USDOL reiterated similar requirements in UIPL No. 10-20 and
UIPL No. 13-20, Change 1, issued on March 12, 2020 and May 4,
2020, respectively. Although states had flexibility when
establishing how individuals could demonstrate they met the able
and available requirements, USDOL stated specifically in UIPL
No. 13-20, Change 1, that states may not waive the requirement
in response to the spread of COVID-19. Within UIPL No. 10-20,
USDOL referenced federal regulation 20 CFR 604 stating the UC
program is designed to provide temporary wage insurance for
individuals who are unemployed due to a lack of suitable work.
The able and available requirements implement this design by
testing whether the reason an individual did not work for any week
was involuntary due to the unavailability of suitable work.
UIA Manual Section 6335 states that to receive unemployment
benefits, a claimant must be able and available to perform
suitable full-time work during all hours and shifts of their normal
occupation. Suitable full-time work includes work the claimant is
qualified to perform and is generally similar to work for which
wages were previously earned. UIA may require a claimant to
provide documentation to substantiate they are able and available
to perform suitable full-time work.
We reviewed the weekly benefit certification forms UIA required
claimants to complete for UI, EB, and PEUC claims from January
2020 through December 2021 and noted for the 62 benefit weeks
ended March 21, 2020 through May 29, 2021, UIA did not include
questions requiring claimants to certify they were able and
available for full-time work. Pursuant to EO 2020-24, issued in
March 2020, UIA suspended the requirement that a claimant
certify to seeking work and to questions about being able and
available as conditions for eligibility. However, when the
Governor issued EO 2020-57 and rescinded EO 2020-24 on
April 22, 2020, effectively reinstating the eligibility requirement
that claimants certify they are able and available for full-time work,
UIA did not promptly restore the applicable questions to the
weekly benefits certification form. UIA resumed requiring
claimants to certify they were seeking work for weeks beginning
May 30, 2021, and at that time restored the questions on the
certification forms regarding being able and available.

Michigan Office of the Auditor General
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E-mails show UIA helped draft many of the unemployment-related
changes in EO 2020-24, including the provisions that waived
State and federal able and available requirements. UIA did not
provide us with an explanation as to why it did not immediately
revise its weekly certification form subsequent to the issuance of
EO 2020-57. UIA previously informed us it bypassed established
procedures requiring approvals from key UIA personnel when
developing the weekly certification criteria because of the urgency
to make the forms available in response to the COVID-19
pandemic. As a result, UIA did not practice effective internal
control and could not provide any documented approvals for the
weekly certifications which removed or did not include the able
and available questions.
When UIA reinstated
the able and available
questions, the related
potential eligibility
issues identified in
MiDAS increased
approximately 450%.

When UIA reinstated the able and available questions, the related
potential eligibility issues identified in MiDAS increased
approximately 450% from May 2021 (22,400 cases) to June 2021
(123,800 cases). The lack of including required criteria on the
weekly certifications likely factored into Michigan's high ranking in
number of benefit weeks compensated by Labor Force Participant
compared with other states, as shown in Exhibit 6.
We consider this finding to be a material condition because,
despite USDOL explicitly expressing in its May 2020 guidance
states could not waive the able and available requirements in
response to the spread of COVID-19, UIA continued to waive
them for over a year. To identify if there were overpayments to
claimants who may not have been able and available during the
62 benefit weeks for reasons such as being a full-time student,
needing childcare or transportation, and having medical issues,
UIA would need to seek recertifications. However, UIA likely
would also need to seek guidance from USDOL to determine if it
could waive any related overpayments due to agency error for the
omission of the able and available questions on the original
certification forms.

RECOMMENDATION

We recommend that UIA improve its internal control to ensure
claimants consistently certify to all applicable eligibility
requirements on their weekly benefit certifications.

AGENCY
PRELIMINARY
RESPONSE

UIA agrees with the Finding. Given the length of its preliminary
response, the response and our auditor's comments are
presented on page 100.

Michigan Office of the Auditor General
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FINDING 10
Improvements needed
to accurately calculate
WBAs.

UIA did not review or timely review income documentation
supporting many PUA claimants' requests for WBAs above the
minimum established by law for the program.
Accordingly, UIA did not determine the correct WBA for some
claimants and did not timely adjust the WBA for other claimants
whose income documentation supported a WBA different from
their original monetary determinations.
UIPL No. 16-20 requires the WBA for PUA claims to be the same
amount as the WBA authorized under each state's UC law for
regular UI benefits, except in no case will the amount be less than
the minimum WBA described in federal regulation 20 CFR 625.6,
which for Michigan was $160 throughout the COVID-19
pandemic. UIPL No. 16-20, Change 1, issued April 27, 2020,
required PUA claimants to provide income documentation
supporting requests for PUA payments above the minimum WBA
and noted acceptable documentation included income tax returns,
state agency wage records, paycheck stubs, bank receipts, and
other items.
When UIA needs to change a claimant's previously determined
WBA, section 32a(2) of the MES Act states UIA must initiate a
redetermination of an earlier adjudication within one year of the
date of mailing the original determination on the disputed issue or,
if the original determination involved a finding of fraud, within
3 years of the date of mailing or personal service of the original
determination.
We reviewed a random sample of 25 PUA income verification
cases from benefit weeks ended February 8, 2020 through
September 4, 2021 and noted:

UIA programmed
MiDAS to
automatically increase
a claimant's WBA
based on selfattestation of earnings
without any manual
review of the
appropriateness of
income
documentation
submitted by
claimants in their
initial PUA
applications.

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a. UIA staff did not review the income documentation
submitted by 9 (36.0%) claimants to potentially receive a
WBA above the minimum amount when initially applying
for PUA benefits. We reviewed the income documentation
for these claimants and noted it did not support the higher
benefit amount UIA established and paid to 2 claimants,
resulting in likely overpayments totaling $13,610 (7.9%) of
the $173,191 benefits UIA paid to the 9 claimants. The
overpayments related to apparent data entry mistakes by
the two claimants. These likely overpayments had
occurred on claims in which UIA had made the original
monetary determination more than one year earlier.
UIA programmed MiDAS to automatically open, approve,
and close an income verification case based on a
claimant's self-attestation of earnings. It also resulted in
issuance of a monetary determination for the higher WBA,
if applicable, without manually reviewing the
appropriateness of income documentation the claimants
submitted with their initial PUA applications. UIA
established a process for workers to review the income

documentation and adjust the claimant's WBA, if
necessary, only when claimants provided their income
information after submitting their initial PUA application. In
total, UIA approved 110,303 (31.2%) of the 353,479
income verification cases without staff review. These
claimants received total payments of $1.4 billion and,
assuming a similar error rate from our sampled items, we
estimate overpayments could total $112.0 million for
improper WBA increases.

UIA stated it
anticipated the
requirement for
claimants to provide
proof of income
during the claim filing
application would
prevent
overpayments.

b. UIA reviewed supporting documentation for 16 (64.0%)
income verification cases an average of 471 days after the
case was opened, ranging from 68 to 555 days. UIA
reviewed the supporting documentation for these cases
because the claimants provided the income information
and supporting documentation separate from their PUA
applications. In these instances, UIA established the WBA
after it reviewed the income documentation. However,
delays in UIA's review could result in the claimants not
timely receiving their full benefit amounts, UIA not timely
identifying PUA claimants that should have received
regular UI benefits instead of PUA, and other issues.
UIA informed USDOL in June 2020 it anticipated the requirement
for claimants to provide proof of income during the claim filing
application would prevent PUA overpayments. However, as cited
above, UIA did not manually review the income documentation
claimants provided with their initial PUA applications.
UIA stated its former director and others lacking in-depth
knowledge of UC developed and designed the PUA application
and processing methodology without assistance from more
knowledgeable managers and staff. Although income verification
was a unique requirement applicable to PUA claims, UIA needs to
ensure proper internal control to establish WBA on all UI claims.

RECOMMENDATION

We recommend that UIA ensure it determines claimants' WBAs
timely, accurately, and in accordance with applicable laws.

AGENCY
PRELIMINARY
RESPONSE

UIA agrees with the Finding. Given the length of its preliminary
response, the response and our auditor's comments are
presented on page 103.

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FINDING 11
Improvement needed
for reinstating UC
requirements
temporarily waived.

UIA should have
resumed the seeking
work requirement in
November 2020. UIA
did not do so until the
benefit week ended
June 5, 2021.

UIA did not timely reinstate work search requirements after its
statutory authority to temporarily waive them had expired. This
delay likely allowed claimants who would otherwise be ineligible
for benefits to continue to receive them for up to 7 months and
was in noncompliance with the MES Act. From November 1,
2020 through May 31, 2021, UIA made UC claims payments
totaling $9.5 billion without requiring claimants to actively seek
work.
Section 421.28(1)(a) of the MES Act requires claimants to be
actively seeking work to receive UC benefits. However, on
March 22, 2020, USDOL issued UIPL No. 13-20, which
encouraged states to adopt measures to suspend the
requirement, as needed, to respond to the spread of COVID-19.
On March 25, 2020, the Governor signed EO 2020-24,
suspending Michigan's work search requirement. This and
subsequent EOs extended the suspension until October 2, 2020.
In addition to the EOs, Michigan Administrative Code Rule
421.216(2) provides UIA the authority to waive the seeking work
requirement when Michigan's unemployment rate is 8.5% or
above. Michigan's unemployment rate reached this threshold in
April 2020 before falling back below it in October 2020. Given the
simultaneous expiration of the EO requirement and the State's
unemployment rate falling below 8.5%, as well as the continued
easing of restrictions on public gatherings and temporary
business shutdowns occurring at the time, UIA should have
resumed the seeking work requirement in November 2020. UIA
did not do so until benefit week ended June 5, 2021.
For the benefit week ended June 5, 2021, the number of paid
claims and payments dropped by 92,386 (15.7%) and
$49.5 million (15.9%) from the prior benefit week. This also
coincided with UIA's reestablishment of the requirement claimants
be able and available for work. Sufficient information was not
available for us to determine how much of the claims and
payment reductions were attributable to each of the specific
requirements. However, because the simultaneous
reestablishment of all three requirements generated a significant
number of related nonmonetary issues, each likely had an
immediate impact on the reduction of claims paid. The number
and dollar amount of paid claims and payments continued to
decline each week through September 4, 2021, when the federal
UC programs ended. As noted in Finding 9, the lack of eligibility
issues prior to UIA's reinstatement of the ability and availability
questions, combined with untimely implementation of work search
requirements, likely factored into Michigan's high ranking in
number of benefit weeks compensated by labor force participant
compared with other states as shown in Exhibit 6.
UIA informed us it had intended to reinstate the work search
requirement by the end of November 2020, but other priorities,
including implementing provisions of the CAA and the need to
update claimant notification documents and pertinent sections of
its operations manual, were more pressing.

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RECOMMENDATION

We recommend that UIA timely reinstate program requirements
that help ensure proper administration of UC funds.

AGENCY
PRELIMINARY
RESPONSE

UIA provided us with the following response:
We agree and have begun steps to timely implement program
requirements to help ensure efficient administration of UC funds.
We are also confident that with the implementation of a new UI
system we will be able to achieve this expectation. On
November 15, 2022, the UIA announced it had chosen a new
vendor to design and install a modern, innovative, user-focused
unemployment insurance computer system that prioritizes ease of
access for workers and employers while also streamlining jobless
claims processing. The new system will replace the Michigan
Integrated Data Automated System (MiDAS), first put into use
nearly a decade ago.
The pandemic presented real time challenges for which
unemployment insurance agencies nationwide were ill prepared.
At the start of the pandemic, UIA responded quickly and with
empathy to calls from both the legislature and claimants to get
payments out the door and into the accounts of Michigan workers.
The Michigan UIA was not alone in the challenges it faced.
However, Michigan is uniquely equipped to respond and rectify
these issues and has already begun the process of doing so.
UIA prioritized the implementation of federal program extensions
to ensure minimal impact on unemployed workers relying on
benefits to sustain them and their families. UIA will continue to
evaluate competing priorities to timely implement program
requirements that help ensure efficient administration of UC
funds. UIA will also institute and maintain a communication plan
so that, as the need arises, timely notice can be provided to
customers when there are changes in a program's requirements,
such as work search obligations. The UIA is already working with
a Detroit-based nonprofit to improve our communication with
claimants as well as to create a better system to walk customers
through both eligibility guidelines and applying for benefits.
The UIA is committed to ensuring that all workers who are eligible
for benefits receive them. Accuracy and efficiency are central to
the success of any UI program and to the determination of
eligibility for UC benefits in accordance with associated
requirements. However, it cannot be stressed enough how
greatly the UIA is hamstrung by the limitations and support of our
current database. The same system limitations noted in the
response to the ninth finding continue to plague the agency's
ability to respond in a timely manner to the concerns noted in this
one. Wholesale change is necessary to the UIA's operating
system to deliver the level of service Michigan workers and
businesses expect.

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FINDING 12
Improvement needed
to consistently meet
select federal claims
processing
performance
standards.

UIA's monthly
performance was
below standard for
85.7% of the months
we reviewed.

UIA did not consistently meet select federal claims processing
performance standards. Improved performance will help UIA
ensure timely and accurate payments and appropriate claim
adjudications.
USDOL ETA establishes performance standards or UI Performs
core measures as its performance management system to ensure
increasingly effective, consistent, and efficient service to workers
and employers. The core measures within UI Performs monitor
key activities that have uniform national acceptable levels of
performance. We reviewed UIA's compliance with select core
measures for January 1, 2020 through September 30, 2021 and
noted:
a. UIA did not consistently meet the UI Performs core
measure requiring it to make at least 87% of all initial
benefit payments within 21 days of the week ending date
of the first compensable week of a claimant's benefit year.
UIA's monthly performance was below standard for
18 (85.7%) of the 21 months we reviewed. UIA's
performance for the 18 months ranged from 34.8% to
81.5% and averaged 53.5%.
Starting in 2014 and continuing through 2019, USDOL
designated Michigan as "At-Risk" for consistently failing to
meet ETA's UI Performs core measure related to first
payment timeliness. UIA stated it did not receive any
"At-Risk" letters from USDOL for fiscal year 2020 or 2021.
UIA stated it was working with ETA to improve its first
payment timeliness before the COVID-19 pandemic but
halted the collaboration when the pandemic began.
b. UIA did not meet the UI Performs core measures requiring
it to complete at least 80% of nonmonetary separation
determinations and nonseparation determinations within
21 days of their issue detection dates for 7 (100.0%) of the
7 quarters and 5 (71.4%) of the 7 quarters we reviewed,
respectively. UIA's performance for separation
determinations ranged from 6.0% to 61.0% and averaged
23.3%, while its performance for nonseparation
determinations for the 5 quarters ranged from 24.1% to
59.9% and averaged 43.0%. For the most recently
reviewed quarter, being quarter ended September 30,
2021, Michigan was ranked 24th and 30th among the 50
states for its performance on the separation and
nonseparation determination core measures, respectively.
c. Michigan did not meet the UI Performs core measure
requiring the average age of pending lower authority
appeals to be 30 days or less for 6 (85.7%) of the 7
quarters we reviewed. For the 6 quarters, the average
age of pending lower authority appeals ranged from 33.5
days to 156.0 days and averaged 71.6 days. For the most
recent quarter, being quarter ended September 30, 2021,

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Michigan was the 5th highest performing state for this core
measure.
d. UIA did not meet the UI Performs core measure requiring
at least 75% of nonmonetary determination quality scores
be equal to or greater than 95 points for 2 (40%) of 5
quarters we reviewed for separation-related
determinations and 1 (20%) of 5 quarters for
non-separation determinations. The number of quarters
tested was limited because USDOL did not require
reporting of nonmonetary quality scores during the first 2
quarters of the pandemic, being January 1, 2020 through
June 30, 2020.
After missing the standard for both separation and
non-separation issues in the quarter ended September 30,
2020, UIA significantly improved the quality of its
determinations during the remainder of the review period.
During this period, UIA missed the core measure for
separation determinations for only one quarter and by
only 1.3%.
We reported similar issues in Finding 6 of our April 2016
performance audit report on Claimant Services (641-0318-14),
and our subsequent February 2020 follow-up report on Claimant
Services (641-0318-14F). Our follow-up report noted UIA was not
consistently meeting federal standards for first payment and
nonmonetary determination timeliness but had met standards for
lower authority appeal timeliness and nonmonetary determination
quality.
UIA informed us the large influx of UI claims and other workload
during the pandemic led to difficulties in meeting federal claims
processing performance requirements. We reviewed the
timeliness of UIA's adjudication of MiDAS cases and its review of
other documentation. See Observation 2 for details, which in part
contributed to UIA's inability to consistently meet federal
performance standards.
RECOMMENDATION

We again recommend that UIA continue to take actions to
consistently meet federal claims processing performance
standards.

AGENCY
PRELIMINARY
RESPONSE

UIA provided us with the following response:

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We agree. UIA will implement measures to consistently meet
federal performance standards related to initial benefit payments,
nonmonetary determination, and lower authority appeals
processing. We will also take action to ensure the consistent
quality of our separation-related and non-separation related
nonmonetary determinations.

Throughout the pandemic the UIA was acting swiftly and with
empathy to address hardships that people were going through
due to a global pandemic. The volume of claims filed in the
spring of 2020 peaked with a high of over 388,000 in a single
week, compared with just 5,000 claims before the pandemic and
a weekly high of 77,000 claims during the Great Recession. Since
March 15, 2020, over $40 billion in benefits has been paid to over
3.5 million workers. The UIA has increased capacity, improved
workflow and other internal systems, and reduced red tape to
meet the unprecedented level of claims that have been filed since
the pandemic began.
At the height of the pandemic, customer facing staff more than
quadrupled. Before the pandemic, the UIA had around 650 staff;
at its peak nearly 3,000 UIA team members were helping
claimants. These numbers were documented at length by the
OAG in the Personnel Management Audit released earlier this
year.
If there were slowdowns, it was not due to a lack of diligence and
commitment to getting money out the door to eligible workers.
Rather, it was because of technological and resource limitations;
limitations the present director has a plan to resolve as
documented in response to both the MIDAS, Personnel
Management, and this present audit. This plan is evident with the
November 15, 2022, announcement that the UIA had chosen a
new vendor to design and install a modern, innovative, userfocused unemployment insurance computer system that
prioritizes ease of access for workers and employers while also
streamlining jobless claims processing. The new system will
replace the Michigan Integrated Data Automated System
(MiDAS), first put into use nearly a decade ago.
Specifically related to the elements within this finding:
Parts a. and b.: UIA introduced a continuous improvement
program and successfully piloted several initiatives with three
teams beginning in June 2022 resulting in at least a 20% increase
in staff productivity. The initiatives include one-on-one coaching,
individual and team goal setting, daily team huddles, and
interactive desk aids. In August 2022, UIA expanded the pilot
program to an additional 33 teams resulting in a peak 39%
increase in staff productivity with an average increase in
productivity of 29%. UIA plans to expand the continuous
improvement program agencywide by the end of 2023 and to
continue exploring additional initiatives to help increase staff
productivity.
Additionally, UIA is working with its partner, a Detroit-based
nonprofit, to improve claimant and employer communication and
make the claimant portal more user-friendly. These
improvements will reduce the number of customer contacts so
that staff may focus on processing work resulting in timelier

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determinations and issuance of first payments. The
improvements are expected to be implemented by the end of
2023.
Part c. (Response provided by Michigan Office of Administrative
Hearings and Rules [MOAHR]):
Failure to meet this metric is attributable to multiple factors
including the fact that during the period subject to the finding UIA
transferred cases to MOAHR on average 33 days after the appeal
was filed. During the last 3.5 quarters of the current fiscal,
January 1, 2022, through August 22, 2022, this metric has grown
to 61 days. Additionally, as UIA focuses resources on backlog
processing, absent additional resources for appeals processing,
case volume exceeds MOAHR's capacity constraints. Finally, as
older cases continue to be transferred from UIA's backlog to
MOAHR's pending cases, the older cases take precedence in
scheduling and therefore push the more recent cases back in the
queue such that they cannot be processed within the established
metric.
MOAHR has no ability to impact timeliness from case filing to
transfer to MOAHR, but has initiated several processes to
expedite processing cases once the appeal is received, including:
seeking funding for additional limited-term staff; cross utilization of
other staff within MOAHR to address unemployment case volume;
implementation of expedited dockets to increase case throughput;
and IT system upgrades and implementation of various protocols
and procedures to increase efficiency and avoid case
adjournments, decrease lag time in transfer of cases, etc.
Part d.: UIA requires managers to review each team member's
work for quality at least once bi-weekly and review the results with
staff when improvement is required. The manager then
determines plans to assist staff in improving their quality of work.
This requirement has been incorporated into the continuous
improvement program one-on-one coaching. Managers are
required to report weekly the results of both the productivity and
quality of work for their team.
The Benefits Customer Service and Operations Divisions are also
working on a training plan to ensure all staff are trained
appropriately for the work to which they are assigned. The plan
will include additional practice time where staff will work in pods
and have immediate access to assistance as questions arise
ensuring better quality after training.

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OBSERVATION 1
Data analytics could
help UIA identify
suspicious claims.

UIA could analyze its claims data in MiDAS to identify and follow
up with claimants receiving UC benefits whose separation
reasons or COVID-19 related attestations could trigger its
reasonable suspicion protocol.
When applying for regular UI benefits during the COVID-19
pandemic, UIA required claimants to identify the reason they were
no longer working for their last employer (e.g., temporary
shutdown) along with their separating circumstance (e.g.,
layoff/temporary leave due to COVID-19). Similarly, PUA
claimants had to self-attest to the COVID-19 related reason(s)
responsible for their unemployment, underemployment, or inability
or unavailability for work both upon application and each week
thereafter when they certified for UC benefits (starting for weeks
ended after July 4, 2020). UIA used this information in verifying a
claimant's initial eligibility for PUA and their eligibility for weekly
benefit payments thereafter.
UIPL No. 16-20, Change 2, issued on July 21, 2020, authorized
states to request supporting documentation to address cases
when there was a reasonable suspicion of fraud on a PUA claim.
UIPL No. 16-20, Change 4, issued on January 8, 2021, took this a
step further and highlighted specific circumstances that would
raise the specter of fraud. Specifically, it stated some of the valid
COVID-19 related reasons PUA claimants could attest to on their
applications and weekly benefit certifications were likely to be
valid for only a short duration. It also reiterated the COVID-19
reason regarding school closures did not apply to weeks after the
date the school year was originally scheduled to end (i.e.,
summer break) as originally stated in UIPL No. 16-20, Change 1,
issued April 27, 2020.

One third of sampled
UI, EB, and PEUC
claimants selected a
temporary separation
reason and/or
temporary separation
circumstance but
claimed UC benefits
for an average of
59 weeks.

We reviewed 60 paid UI, EB, and PEUC claims and identified 20
claimants who selected a temporary separation reason and/or
temporary separation circumstance and claimed UC benefits for
34 to 81 weeks, or an average of 59 weeks. To assess the
appropriateness of these claims, UIA would need to review its
employer reported wage records and contact the claimants and
their separating employers to determine whether the claimants
had unreported wages for the benefit weeks in question, refused
a request to return to work, returned to work but continued
claiming benefits, or went to work for another employer while
continuing to claim benefits.
We also analyzed the COVID-19 related reasons PUA claimants
selected in their weekly benefit certifications for weeks ended
after July 4, 2020 and noted the following conditions UIA may
determine meet its reasonable suspicion criteria:
a. As shown in the following chart, we identified a number of
claims in which claimants selected COVID-19 related

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reasons that would typically be used on a short-term basis
but claimants used on a long-term basis:
Number of Claims in Which the Claimant Selected the Following COVID-19 Related Reason
Claimant Diagnosed
With COVID-19 or
Member of
Experiencing Symptoms
Claimant's Household
and Seeking Diagnosis Diagnosed With COVID-19
Number of
Weeks
27 to 52
53 or more

Claimant Unable to Work
Because of Imposed Quarantine or
Was Advised to Self-Quarantine
Due to COVID-19

Claimant Unable to Work
Because of Providing Care for a
Household Member Who Was
Diagnosed With COVID-19

Claimant Selected the Identified Reason
9,853
4,002

11,830
4,958

41,101
17,042

9,793
3,766

Claimant Selected the Identified Reason Without Selecting Other Authorized Reasons
27 to 52
53 or more

640
154

473
68

7,728
2,161

317
48

b. As shown in the following chart, we identified a sizable
number of claims in which claimants selected an unusually
large number of different COVID-19 related reasons in the
same weekly certification or in multiple certifications over
the lifetime of a claim:
Claimant Certified Using Multiple
COVID-19 Reasons in a
Single Week
Number of
Number of
Reasons Selected
Instances
9 to 12
13 to 15

118,468
719

Claimant Certified Using Multiple
COVID-19 Reasons
Over the Lifetime of the Claim
Number of
Number of
Reasons Selected
Claims
9 to 12
13 to 15

45,817
2,628

It was not unusual for claimants to select more than one
COVID-19 related reason during a given week. However,
the varied reasons available for selection made it unlikely
a large number of them would be applicable in any given
week and to a lesser degree over the life of the claim.
c. Claimants made 1.37 million certifications for benefit
weeks between mid-June and mid-August in 2020 and
2021 indicating they were the primary caregiver for a child
who was unable to attend school or other facility closed
due to COVID-19. This period was typically after the end
of their school year and before the beginning of the next
school year. In 232,515 instances, this was the only
COVID-19 reason the claimants selected.
d. Claimants made 277,289 certifications in which they
attested they had quit their job as a direct result of
COVID-19 and their place of employment was closed as a
direct result of COVID-19, which we view as mutually
exclusive reasons for their unemployment,
underemployment, etc.
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Exhibit 8 shows the number of weeks and dollar amount of
benefits paid on individual claims over the pandemic. UIA paid
UC benefits on approximately one-third of all claims for 27 weeks
or more with nearly 500,000 claims receiving benefits for over a
year. Exhibit 9 shows the number of weeks claimants in each
standard occupational classification (SOC) code major group
received benefits. The SOC group with the largest number of
claimants receiving benefits the longest was for food preparation
and serving related jobs.
Although UIA was not required to conduct any of these specific
analyses and follow up on suspicious claims identified by them,
they represent an opportunity for UIA to contribute to the overall
integrity its UC programs. Further, as noted in Finding 1, the time
limit for issuing a determination on intentional misrepresentation is
three years from the date of the improperly paid benefits.

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Establishing and monitoring metrics related to case and document
processing for claims could help UIA ensure the timely processing
of claims-related information and address longstanding
deficiencies in meeting USDOL's broader performance goals
highlighted in Finding 12.

OBSERVATION 2
Establishing and
monitoring metrics
could help improve
the timeliness of case
and document
processing.

We reviewed 120 randomly selected paid UC claims and 80
randomly selected UC claims with no associated payments as of
October 2021. We noted these 200 claims had a total of
731 associated cases (e.g., nonmonetary issues, protests, or
identification verification) and 171 work items, tasks, or
claims-related documents.
As can be seen in the following charts, UIA took or is taking a
significantly long period of time processing many of these items:
a. Cases
UIA processed 58 (7.9%) and 26 (3.6%) cases more than
6 and 12 months, respectively, from the date it opened
them. In addition, as of March 31, 2022, 75 (10.3%) cases
remained unprocessed. These cases have been open
between 7 and 729 days, averaging 391 days.

PUA
UI, EB, and
PEUC
Total

Cases Closed/Discarded
From 91 to 180 Days From 181 to 365 Days
From Creation
From Creation
41
47

Within
21 Days
171

From 22 to 90 Days
From Creation
101

207

378

135

Over 365 Days
From Creation
23

Cases Still Open
as of March 31, 2022
41

b. Work Items, Tasks, or Claims-Related Documents
UIA processed 56 (32.8%) and 15 (8.8%) of the work
items, tasks or claims related documents for more than 6
and 12 months, respectively, from when it established or
received them. In addition, as of March 31, 2022,
38 (22.2%) items remained unprocessed. UIA had
established or received these items between 41 and 800
days, or an average of 430 days, earlier.

PUA
UI, EB, and
PEUC
Total

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Reviewed
0 to 90 Days
From Receipt
13

Reviewed
91 to 180 Days
From Receipt
22

Reviewed
181 to 365 Days
From Receipt
33

Reviewed
Over 365 Days
From Receipt
3

Not
Reviewed
9

20
33

7
29

23
56

12
15

29
38

In Finding 8 of our February 2016 performance audit report on
MiDAS, Department of Talent and Economic Development
(641-0593-15), we noted UIA had not fully reviewed and
implemented methods to automate MiDAS claim processing
related to documents it received via mail or facsimile, which
required UIA to manually input responses into MiDAS. UIA
informed us it still does not have a way to automate claimant or
employer fact-finding responses received via mail or facsimile to
the MiDAS case.

Delayed adjudication
of employer protests
led to benefit
overpayments
approximating
$33,000 and $43,000
for two sampled
claimants.

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Timely adjudications and processing or review of claims-related
information can significantly impact the appropriateness of a
claimant's overall eligibility determination for UC benefits and/or
the amount of UC benefits they are approved to receive. For
example, we noted a claimant in our sample had filed for regular
UI benefits in June 2020, and the claimant's separating employer
timely protested the claim approximately two weeks later.
However, UIA did not review the protest until July 2021, at which
time it sent fact-finding requests to the claimant and employer and
ultimately determined the claimant was ineligible for benefits and
needed to return approximately $33,000 in benefit overpayments.
In another sampled claim, a claimant filed for UI benefits in May
2020, and UIA received a timely employer protest to a claim but
did not attach it to a case associated with the claim and send
fact-finding requests for over a year. After approximately 10 more
months, UIA adjudicated the case and found the claimant
ineligible for benefits and owing approximately $43,000 in
improperly paid benefits. Timely processing of the employer
protests could have prevented the improper payments.

COMMUNICATING WITH UI CLAIMANTS
BACKGROUND

UIA communicates with claimants via a Web-based program,
telephone calls, and live online chats. UIA's MiWAM allows
claimants to apply for UC benefits and submit documents to UIA
and UIA to receive and respond to claimant inquiries via Web
notices. In addition, UIA has call centers and interactive chat
lines claimants can use to file claims and resolve claims-related
questions. UIA also communicates with claimants through United
States Postal Service (USPS) mail.
In September 2019, UIA implemented its InContact system, which
allowed UIA staff to handle claim accounts by telephone and
interactive chat. The InContact system allows for telephone calls
to be distributed to staff based on wait time and the needs of
claimants. Beginning in April 2020, UIA began using workers
from multiple staffing agencies to supplement its existing
operations, as reported in our March 2022 performance audit
report on UIA's Personnel Management Processes During the
COVID-19 Pandemic (186-0310-21).
In early 2020, before the COVID-19 pandemic, UIA received
approximately 19,500 telephone calls and online chats (contacts)
per week. UIA call center employees handled about 17,700
(90.8%) of these claimant contacts per week. During the first 3
months of the pandemic, the average number of claimant contacts
per week increased to approximately 859,000. UIA's staff
handled an average of about 30,300 of these contacts per week.
As the pandemic progressed, UIA significantly increased its
number of call center staff and handled up to 180,630 claimant
contacts per week. See Exhibit 11 for monthly call center data.

AUDIT OBJECTIVE

To assess the effectiveness of UIA's communications with UI
claimants during the COVID-19 pandemic.

CONCLUSION

Not effective.

FACTORS
IMPACTING
CONCLUSION

•

The communication issue noted in the material condition
related to administering the PUA requalification, recertification,
and overpayment waiver processes (Finding 4).

•

The material condition related to UIA's responses to claimants
who contacted UIA and UIA's unclear communication provided
to claimants (Finding 13).

•

The reportable condition related to UIA's insufficient
monitoring of the quality of call center workers (Finding 14).

Michigan Office of the Auditor General
186-0319-21

FINDING 13
Improvements needed
to UIA's
responsiveness to
claimant contacts and
communications.

UIA was not sufficiently responsive to claimant contacts during
the COVID-19 pandemic. Also, some of UIA's standard written
claimant communications were confusing or appeared
contradictory.
These conditions negatively impacted UIA's ability to meet its
stated goal of providing excellent customer service. It also
frustrated claimants as evidenced in a June 2021 claimant survey
administered by a consultant hired by LEO in which 62% of 1,457
respondents indicated they were either extremely dissatisfied or
somewhat dissatisfied with UIA's unemployment services.
Specifically, 69.0% and 41.0% of claimants reported the hardest
part of the unemployment process was resolving an issue on their
claims and getting status updates on their benefits, respectively.
The same survey reported over 33.0% of respondents found it
challenging to understand UIA's communications.
UIA offered claimants four primary means for contacting it with
claims inquiries: telephone call, live online chat, MiWAM Web
notice, and USPS mail. Despite significantly increasing its
telephone line count in the early weeks and months of the
pandemic to handle more incoming calls along with the number of
workers to take these calls and respond to claimants' chats and
Web notices, UIA was unable to respond or timely respond to
claimants' communications throughout much of the pandemic.
Also, some of UIA's written communications to claimants
contained confusing wording or wording which, when considered
with other communications sent to the same claimants around the
same time, appeared contradictory.
We reviewed UIA's weekly telephone call and online chat data
from the COVID-19 pandemic (see Exhibit 11) and claimant Web
notices UIA received through MiWAM and UIA written
communications sent to claimants for a random sample of 120
paid claims and 80 unpaid claims and noted:

UIA's telephone
system did not track
the number of calls to
its call center that
received busy signals.

a. UIA's telephone system did not track the number of calls
to its call center that received busy signals and, therefore,
were unable to connect with UIA, which prevented full
measurement of UIA's effectiveness at receiving and
responding to claimant telephone inquiries during the
pandemic. However, anecdotal evidence provided by
multiple sources suggested UIA's telephone system,
insufficient staffing, staff inexperience, and complexities of
the new federal UC benefit programs precluded it from
handling much of the extremely large call volume during
much of the pandemic despite UIA significantly increasing
staffing and the number of available lines in the call center
throughout the pandemic.
b. UIA did not respond to approximately 15.7 million (93.5%)
of 16.8 million claimant chat attempts from March 29, 2020
through October 2, 2021. While UIA's response rate

Michigan Office of the Auditor General
186-0319-21

averaged less than 1% per week from March 29, 2020
through September 26, 2020, its response rate varied
significantly from week to week thereafter as its staffing
increased and the volume of chat attempts ebbed and
flowed. UIA improved its response rate to combined
claimant call and chat contacts to a peak of 93% in August
2021.

UIA did not respond
to approximately
93.5% of 16.8 million
claimant chat
attempts.

c. UIA did not respond to 57 (27.7%) of 206 claimants'
questions received through MiWAM Web notices. Also,
UIA indirectly responded to 79 (38.3%) Web notices
through other actions (e.g., claims payment or issuance of
a determination) and directly responded to 70 (34.0%)
Web notices, although in many instances these responses
were not timely. The following chart depicts the timeliness
of UIA's responses for all 206 Web notices.

Form of
Response
No response
Indirect response
Direct response
Total

Number of
Claimant Web
Notices in Sample
57
79
70
206

Percent of
Total
27.7%
38.3%
34.0%
100.0%

Within
1 Week
26
38
64

Response or Resolution
Between Between Between
1 and 4
4 and 8
8 and 26
Weeks
Weeks
Weeks
33
16
49

14
6
20

4
4
8

Between
26 and 52
Weeks

Average
Number of Days to
Respond or
Resolve

2
6
8

26
40
33

UIA informed us it did not have sufficient staffing to
respond or timely respond to the extremely high volume of
claimant contacts received during the pandemic.
d. UIA did not include the claimant's overall eligibility status
and any remaining open issues in its written claimant
communications and used language including double
negatives which resulted in confusing nonmonetary
redetermination communications to claimants.
When an issue arose about a claimant's eligibility for UI
benefits, UIA sent the claimant a request for additional
information and upon adjudication sent the claimant a
nonmonetary redetermination letter regarding the
claimant's benefit eligibility in relation to the subject issue.
However, when multiple issues were open simultaneously,
the resulting nonmonetary redetermination letters could
confuse the claimant's ultimate benefit eligibility status.
For example, a claimant received a nonmonetary
redetermination in July 2021 stating the claimant was not
eligible for benefits beginning July 3, 2021 and another
nonmonetary redetermination in September 2021 stating
the claimant was eligible for benefits even though the
claimant remained ineligible for benefits based on the July
2021 nonmonetary redetermination. Another claimant
received two nonmonetary determinations on the same
day, one stating the claimant was "not disqualified" for

Michigan Office of the Auditor General
186-0319-21

Federal plain
language guidelines
suggest avoiding the
use of double
negatives to improve
the clarity of official
federal
communications.

benefits and one stating the claimant was ineligible for
benefits. Also, UIA sometimes used double negatives in
its nonmonetary eligibility determinations. For example,
when UIA reversed a prior determination finding a claimant
ineligible for benefits, it stated the claimant was "not
ineligible" for benefits rather than simply stating the
claimant was "eligible" for benefits. Federal plain
language guidelines suggest avoiding the use of double
negatives to improve the clarity of official federal
communications.
UIA informed us it began working to improve claimant
communications and incorporate plain language into its claimant
communications in 2019 but had to stop because of the
pandemic. On May 1, 2021, LEO contracted with a vendor to
improve its claimant communications. Improved communications
should help to reduce the number of claimant telephone calls,
online chats, and Web notices and allow UIA to use its limited
staffing resources more effectively.
We consider this finding to be a material condition because of the
difficulties claimants had reaching UIA during the pandemic and
confusing communications.

RECOMMENDATION

We recommend that UIA improve its responsiveness to claimant
contacts and the clarity of claimant communications.

AGENCY
PRELIMINARY
RESPONSE

UIA agrees with the Finding. Given the length of its preliminary
response, the response and our auditor's comments are
presented on page 105.

Michigan Office of the Auditor General
186-0319-21

FINDING 14
UIA needs to ensure
the completion of call
center staff
monitoring.

Workers generally
had no prior
experience working
with unemployment
claims and most
workers lacked prior
call center
experience.

UIA did not sufficiently monitor or ensure contracted staffing
agencies sufficiently monitored the quality of the work of contract
workers and limited-term State employees brought on to assist in
UIA's call center during the COVID-19 pandemic.
Increased monitoring would help UIA timely identify workers
requiring additional training to improve their communication skills,
unemployment-related knowledge, and understanding of UIA
systems or processes and their assigned tasks, all of which help
ensure more positive customer service, including providing
claimants with accurate and complete information.
From March 29, 2020 through October 2, 2021, UIA received
approximately 8.7 million claimant calls and 16.8 million claimant
chat messages (see Exhibit 11). To assist it in handling these
claimant contacts, UIA contracted with 3 staffing agencies
(Accenture, Robert Half, and Provalus) and 16 Michigan Works!
Agencies* (MWAs) to provide approximately 5,500 workers. UIA
also hired approximately 590 limited-term State employees to
assist in handling these communications. Except for MWA
workers, these workers generally had no prior experience working
with unemployment claims/claimants and most workers lacked
prior call center experience. Before beginning their official duties,
most workers received an abbreviated three-day training covering
UIA's automated claims processing and telephone systems, call
center operations and related expectations, and task specific
training. Because of these conditions, it was imperative the new
workers be closely monitored to ensure they provided timely,
accurate, and complete information to claimants; treated
claimants appropriately; and accurately documented their
claimant contacts in MiDAS when warranted.
UIA's contracts with Accenture and Robert Half required their
supervisors to monitor the quality of their workers' services;
however, the requirements were not effective until approximately
one month and seven months after the agencies began providing
workers to UIA, respectively. Although the two contracts did not
delineate the specific monitoring procedures the agencies were to
employ, UIA informed us it informally agreed with Accenture that
its supervisors were to listen in on and review a call or review and
evaluate a text chat for five workers from each of the agency's
teams, weekly. UIA informally agreed with Robert Half that its
supervisors were to listen in on and evaluate two calls or review
and evaluate two text chats for each worker, weekly. UIA did not
contractually establish any service quality monitoring
requirements for Provalus or the MWAs even though the MWAs
used their own telephone systems, which UIA was unable to
access. UIA informed us it planned to monitor the quality of
services delivered by Accenture and Robert Half workers before
the staffing agencies started doing it themselves and for its own
limited-term employees by reviewing two calls per worker per
week. However, UIA later informed us its managers did not have

* See glossary at end of report for definition.
Michigan Office of the Auditor General
186-0319-21

sufficient free time to conduct any call or chat monitoring for the
staffing agencies' workers during these time periods. We
reviewed UIA's and the staffing agencies' call and chat quality
monitoring activities and noted:
a. Accenture did not conduct call or chat monitoring reviews
for 10 (26.3%) of 38 workers from a randomly selected
team from each of 8 randomly selected weeks Accenture
was contractually responsible for monitoring. Accenture
did not provide us a reason for not conducting the reviews,
and UIA had not established controls to ensure Accenture
completed them. We listened to the 19 available call
recordings Accenture reviewed and agreed with
Accenture's evaluation results. Accenture noted
deficiencies in 1 (5.3%) of 19 reviews.
b. Robert Half did not conduct 2 (100.0%) of 2 call or chat
monitoring reviews for 9 (47.4%) workers and 1 (50.0%) of
2 reviews for 6 (31.6%) workers for 1 randomly selected
week for each of 19 randomly selected workers Robert
Half was contractually responsible for monitoring. Robert
Half noted record retention issues for missing reviews.
UIA had not established controls to ensure Robert Half
completed them. We listened to the 16 available call
recordings and the 1 available text chat Robert Half had
reviewed and agreed with Robert Half's evaluation results.
Robert Half noted deficiencies in 3 (17.6%) of 17 reviews.
c. UIA did not conduct any call or chat monitoring reviews for
1 randomly selected week for each of 8 (88.9%) of 9
randomly selected limited-term workers working as call
center agents. UIA informed us its managers did not have
sufficient free time to conduct the reviews.

UIA did not have a
process to ensure UIA
staff and the
contracted agencies
documented
corrective action and
any necessary
training or coaching to
address deficiencies
noted in call or chat
monitoring reviews.

Michigan Office of the Auditor General
186-0319-21

UIA stated it did not have a process to ensure UIA staff and the
contracted agencies documented corrective action and any
necessary training or coaching, when applicable, to address
deficiencies noted in call or chat monitoring reviews and improve
claimants' customer service experience.
UIA had a process for electronically monitoring various worker
productivity measures, such as the number of calls taken daily,
the average length of time spent on individual calls, and the total
amount of time spent on calls versus other activities. UIA
informed us it met weekly with staffing agencies to discuss these
metrics and some quality measures to make sure workers were
performing appropriately. However, without the monitoring of
worker telephone calls and text chats, UIA's efforts to evaluate the
quality of each worker's efforts were insufficient.

RECOMMENDATION

We recommend that UIA sufficiently monitor or ensure the
sufficient monitoring of the quality of work of all call center
workers.

AGENCY
PRELIMINARY
RESPONSE

UIA agrees with the Finding. Given the length of its preliminary
response, the response and our auditor's comments are
presented on page 107.

Michigan Office of the Auditor General
186-0319-21

PROCESSING UI CLAIMS AND OTHER RELEVANT DATA
AUDIT OBJECTIVE

To compile and provide information on UI claims processed by
UIA during the COVID-19 pandemic and other relevant data.

CONCLUSION

Information provided.

FACTORS
IMPACTING
CONCLUSION

•

Exhibit 1 presents a description of unemployment programs
and program progression from January 1, 2020 through
June 30, 2022.

•

Exhibit 2 presents the timing and total count of UC claims paid
by benefit week, dollar amount of UC benefit payments by
week paid, and total dollar amount of payments by claim type
and benefit week for weeks ended from January 4, 2020
through October 2, 2021.

•

Exhibit 3 presents the top 15 states with the largest UC benefit
payments and UC benefit payments for USDOL Region 5 from
January 1, 2020 through June 30, 2022.

•

Exhibit 4 presents the top 15 states with the largest UC benefit
payments by labor force participant and UC benefit payments
by labor force participant for USDOL Region 5 from January 1,
2020 through June 30, 2022.

•

Exhibit 5 presents the top 15 states with the largest number of
benefit weeks compensated and the number of benefit weeks
compensated for USDOL Region 5 from January 1, 2020
through June 30, 2022.

•

Exhibit 6 presents the top 15 states with the largest number of
benefit weeks compensated by labor force participant and the
number of benefit weeks compensated by labor force
participant for USDOL Region 5 from January 1, 2020 through
June 30, 2022.

•

Exhibit 7 presents Michigan's UC benefit payments by
program and their related overpayments from January 1, 2020
through June 30, 2022.

•

Exhibit 8 presents the range of weekly benefit payments by
UC claim type and the range of dollar amount of benefit
payments by UC claim type for claims active from January 1,
2020 through September 30, 2021.

•

Exhibit 9 presents the weekly UC benefit payment ranges by
SOC code major groups for claims active from January 1,
2020 through September 30, 2021.

Michigan Office of the Auditor General
186-0319-21

•

Exhibit 10 presents the total UC benefit payments by SOC
code major groups for claims active from January 1, 2020
through September 30, 2021.

•

Exhibit 11 presents the call center activity from October 1,
2019 through September 30, 2021.

SUPPLEMENTAL INFORMATION
UNAUDITED
Exhibit 1
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency (UIA)
Department of Labor and Economic Opportunity (LEO)
Description of Unemployment Programs and Program Progression
January 1, 2020 Through June 30, 2022

Track 1
Individual is eligible for Regular UI.

Supplemental Benefit Program

Federal Pandemic Unemployment
Compensation (PUC):
•

Created by the CARES Act to provide
claimants with an additional $600 per
week and expired for the weeks ended
on or before July 31, 2020.

•

Through the passage of CAA and ARPA
signed by the President on December
27, 2020 and March 11, 2021,
respectively, PUC program benefits
resumed in the amount of $300 per week
for the weeks ended January 2, 2021
through September 6, 2021.
Provided an additional compensation
from $300 to $600 per week, for workers
receiving unemployment compensation
(UC) including those receiving PUA,
regular UI, PEUC, EB, and work share
program benefits.

•

Regular UI (UI):
•
•

Available for claimants with enough income earnings who were unemployed through no fault of their own.
Weekly Benefit Amount (WBA) between $160 to $362.

•

Prior to the COVID-19 pandemic the maximum number of weeks of UI a claimant could receive was 20. This was
temporarily increased to 26 weeks by Executive Orders 2020-10. Additional Executive Orders (2020-24, 202057, and 2020-76) were signed to keep the maximum number of weeks at 26 as the pandemic progressed until
Public Act 229 of 2020 statutorily increased this to 26 weeks when this public act was signed into law on October
20, 2020.
Individual exhausts UI
Pandemic Emergency Unemployment Compensation (PEUC):

•
•

Available for claimants who exhaust UI.
WBA between $160 to $362.

•

Created by the CARES Act allowing for a maximum of 13 weeks, expiring on December 31, 2020. PEUC was
extended to September 6, 2021 by CAA and ARPA to a maximum of 24 weeks and 53 weeks, respectively.
Individual exhausts PEUC and EB is triggered "on"

Lost Wages Assistance (LWA):
•

For the weeks ended August 1, 2020
through September 5, 2020, claimants
receiving UC compensation, from any of
the unemployment programs, received
supplemental LWA program payments.
The President authorized the Federal
Emergency Management Agency (FEMA)
to provide grants to states to make
supplemental LWA program payments of
$300 per week to those receiving at least
$100 in weekly UC compensation.

Extended Benefits (EB)
•
•

Available for claimants who exhaust UI or PEUC, when applicable.
WBA between $160 to $362.

•

Established by the federal government through passage of the Federal-State Extended Unemployment
Compensations Act of 1970.
The basic EB program provides up to 13 additional weeks of benefits when a State is experiencing high
unemployment, which will trigger EB "on". Some States, including Michigan, have also enacted a voluntary
program to pay up to 7 additional weeks (20 weeks maximum) of EB during periods of extremely high
unemployment.

•

Individual exhausts EB or state is not trigged "on" AND individual must be unemployed, underemployed,
unable, or unavailable to work due to an authorized COVID-19 related reason to qualify for PUA.
Pandemic Unemployment Assistance (PUA)
Track 2
Individual is not eligible for Regular UI.

•

Available for claimants who are unemployed, underemployed, unable, or unavailable to work due to an
authorized (by the CARES Act or other USDOL guidance) COVID-19 related reasons and are not traditionally
eligible for Regular UI, such as those who are self-employed and gig workers, or those that have exhausted UI,
PEUC, and EB.

•

WBA between $160 to $362.

•

Created by the CARES Act allowing for a maximum of 39 weeks, expiring on December 31, 2020. PEUC was
extended to September 6, 2021 by CAA and ARPA to a maximum of 50 weeks and 79 weeks, respectively.

•
•

Available for employers to retain or bring employees back to work with reduced hours.
Employees collect partial unemployment benefits to make up a portion of the lost wages.

Work Share
Track 3
Employer wishes to retain staff with reduced
hours.

•

Employee hours/wages may be reduced by a minimum of 15 - 45%.

•

Employers can also retain their current workforce and are given the flexibility to choose which of their employees
are part of a Work Share plan.

•

Work Share WBA calculated by multiplying the reduction of wages and hours by the applicable UI WBA between
$160 to $362.

•

Plans may be approved for a period of up to 52 consecutive weeks.

Source: The OAG created this exhibit based on review of the CARES Act, CAA, ARPA and other USDOL, FEMA, and UIA documentation.

Michigan Office of the Auditor General
186-0319-21

Exhibit 2

CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency (UIA)
Department of Labor and Economic Opportunity (LEO)
Timing of Total Count of UC Claims Paid by Benefit Week, Dollar Amount of UC Benefit Payments by Week Paid, and Total Dollar Amount of Payments by Claim Type and Benefit Week
For Weeks Ended From January 4, 2020 Through October 2, 2021
PUC $600 Per Week

LWA $300
Per Week

PUC $300 Per Week

$2.5

2,000,000

1,800,000

$2.0

1,600,000

$1.5

1,200,000

1,000,000

$1.0

800,000

$0.5

Number of UC Claims Paid

Dollar Amount Paid (In Billions)

1,400,000

600,000

400,000

200,000

Week Ended
Explanation of Spikes and Dips in Benefit Payment Timing
1. May 19, 2020 - UIA corrected the Fraud Manager sequencing issue, see Finding 2.
2. June 19, 2020 - UIA rejected approximately 156,000 pending BPRs, for payments under $11,000, resulting in UIA issuing benefit payments without the need for manual review, see Finding 6.
3. September 19, 2020 - UIA began to pay LWA benefits to claimants this week.
4. February 6, 2021 - UIA began to pay PUA, PEUC and associated PUC for benefit weeks under CAA, after CARES Act expiration.
Explanation of Key
* The amounts represent total claims paid for each benefit week, not claims paid during each benefit week.
** The amounts represent the total benefit payments made in the week, not which benefit weeks they were paid for. Starting with the week ended February 12, 2021, benefit payments are averaged biweekly to smooth immaterial spikes and dips in the trend.
*** The amounts represent total benefit payments for each benefit week, not payments made during each benefit week.
Source: The OAG created this graph from UIA's claim and benefit data from MiDAS.

Michigan Office of the Auditor General
186-0319-21

UNAUDITED
Exhibit 3
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency (UIA)
Department of Labor and Economic Opportunity (LEO)
Top 15 States With the Largest UC Benefit Payments* and UC Benefit Payments* for USDOL Region 5
From January 1, 2020 Through June 30, 2022
California
New York
Texas
Pennsylvania

Top 15 States

Michigan
New Jersey
Illinois
Massachusetts
Florida
Washington
Ohio
Georgia
Virginia
State-funded UC payments

Minnesota

Federally funded UC payments

Maryland
$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

Total UC Benefit Payments (In Billions)

USDOL Region 5

Michigan
Illinois
Ohio
Minnesota
Indiana

State-funded UC payments
Federally funded UC payments

Wisconsin
$0

$20
Total UC Benefit Payments (In Billions)

$40

* UC benefit payments include State UI, EB, PEUC, PUA, and PUC.
Source: The OAG created this exhibit with data obtained from USDOL.

Michigan Office of the Auditor General
186-0319-21

UNAUDITED
Exhibit 4
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency (UIA)
Department of Labor and Economic Opportunity (LEO)
Top 15 States With The Largest UC Benefit Payments1 by Labor Force Participant2 and
UC Benefit Payments1 by Labor Force Participant for USDOL Region 5
From January 1, 2020 Through June 30, 2022

New York
Hawaii
California
Massachusetts
Nevada

Top 15 States

Michigan
New Jersey
Pennsylvania
Rhode Island
Washington
Connecticut
Illinois
Oregon

State-funded UC payments
Federally funded UC payments

New Mexico
Minnesota
$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Total UC Benefit Payments by Labor Force Participant

USDOL Region 5

Michigan
Illinois
Minnesota
Ohio
State-funded UC payments

Indiana

Federally funded UC payments

Wisconsin
$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

Total UC Benefit Payments by Labor Force Participant

1
2

UC Benefit Payments includes State UI, EB, PEUC, PUA, and PUC.
We calculated the information by dividing each state's benefit payments by their respective 2020 civilian labor force.

Source: The OAG created this exhibit with data obtained from USDOL and the U.S. Bureau of Labor Statistics.

Michigan Office of the Auditor General
186-0319-21

UNAUDITED
Exhibit 5
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency (UIA)
Department of Labor and Economic Opportunity (LEO)
Top 15 States With the Largest Number of Benefit Weeks Compensated and
Number of Benefit Weeks Compensated for USDOL Region 5
From January 1, 2020 Through June 30, 2022

California
New York
Texas
Pennsylvania
Michigan

Top 15 States

Florida
New Jersey
Illinois
Massachusetts
Georgia
Ohio
Washington
State UI

Arizona

North Carolina

PEUC
PUA

Maryland
0

100

150

200

250

300

350

Total Number of Benefit Weeks Compensated (In Millions)

USDOL Region 5

Michigan
Illinois
Ohio
State UI

Minnesota

Indiana

PEUC
PUA

Wisconsin
0

Total Number of Benefit Weeks Compensated (In Millions)

Source: The OAG created this exhibit with data obtained from USDOL.

Michigan Office of the Auditor General
186-0319-21

UNAUDITED
Exhibit 6
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency (UIA)
Department of Labor and Economic Opportunity (LEO)
Top 15 States With the Largest Number of Benefit Weeks Compensated by Labor Force Participant* and
Number of Benefit Weeks Compensated by Labor Force Participant for USDOL Region 5
From January 1, 2020 Through June 30, 2022

New York
California
Nevada
Hawaii
Michigan

Top 15 States

Massachusetts
Pennsylvania
New Jersey
Rhode Island
Louisiana
Connecticut
New Mexico
Illinois

State UI

Arizona

PEUC

EB
PUA

Oregon
0

Total Number of Benefit Weeks Compensated by Labor Force Participant

USDOL Region 5

Michigan
Illinois
Minnesota
State UI

Ohio

Indiana

PEUC
PUA

Wisconsin
0

Total Number of Benefit Weeks Compensated by Labor Force Participant

* We calculated the information by dividing each state's number of benefit weeks compensated by their respective 2020 civilian
labor force.
Source: The OAG created this exhibit with data obtained from USDOL and the U.S. Bureau of Labor Statistics.

Michigan Office of the Auditor General
186-0319-21

UNAUDITED
Exhibit 7
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency (UIA)
Department of Labor and Economic Opportunity (LEO)
Michigan’s UC Benefit Payments by Program and Their Related Overpayments
From January 1, 2020 Through June 30, 2022

PUC

Program

PUA

PEUC

EB
UC Benefit Payments
Regular UI

Overpayments
$0

$10

$15

$20

$25

Total UC Benefit Payments and Overpayments (In Billions)

PUC

Program

PUA

PEUC
Outstanding

Recovered
Written Off
Waived

Regular UI
$0

Status of Overpayments (In Billions)

Source: The OAG created this exhibit with data obtained from USDOL and UIA.

Michigan Office of the Auditor General
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UNAUDITED
Exhibit 8
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency (UIA)
Department of Labor and Economic Opportunity (LEO)
Range of Weekly Benefit Payments by UC Claim Type and
Range of Dollar Amount of Benefit Payments by UC Claim Type
For Claims Active from January 1, 2020 Through September 30, 2021

UC Claim Type

Total
Claims

1 to 4
Weeks

Number of Claims Receiving Benefit Payments
5 to 12
13 to 26
27 to 52
53 to 76
Weeks
Weeks
Weeks
Weeks

State UI, PEUC, EB
PUA
Work Share
Other

1,651,721
1,035,047
187,385
345

260,040
63,259
84,984
3

539,097
228,171
85,864
17

433,397
230,938
13,315
65

222,449
225,265
3,205
100

176,056
253,609
17
78

20,682
33,805

Total

2,874,498

408,286

853,149

677,715

451,019

429,760

54,569

UC Claim Type

Total
Claims

Number of Claims Receiving Benefit Payments Totaling Between
$0 to
$10,000 to
$20,000 to
$30,000 to
$40,000 to
More Than
$10,000
$20,000
$30,000
$40,000
$50,000
$50,000

State UI, PEUC, EB
PUA
Work Share
Other

1,651,721
1,035,047
187,385
345

900,874
343,336
184,622
77

402,042
337,228
2,708
71

164,781
156,450
55
70

109,579
180,096

62,344
15,241

12,101
2,696

Total

2,874,498

1,428,909

742,049

321,356

289,717

77,615

14,852

More Than
76 Weeks

Source: The OAG created this exhibit with UIA provided data.

Michigan Office of the Auditor General
186-0319-21

UNAUDITED
Exhibit 9
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency (UIA)
Department of Labor and Economic Opportunity (LEO)
Weekly UC Benefit Payment Ranges By Standard Occupational Classification (SOC) Code Major Groups
For Claims Active from January 1, 2020 Through September 30, 2021

SOC Code
Major Group
51-0000
35-0000
43-0000
11-0000
53-0000
41-0000
47-0000
39-0000
37-0000
31-0000
49-0000
29-0000
27-0000
13-0000
25-0000
17-0000
15-0000
33-0000
21-0000
19-0000
45-0000
23-0000
55-0000
Not Specified

Occupation Description
Production
Food Preparation and Serving Related
Office and Administrative Support
Management
Transportation and Material Moving
Sales and Related Occupations
Construction and Extraction
Personal Care and Service
Building and Grounds Cleaning and
Maintenance
Healthcare Support
Installation, Maintenance, and Repair
Healthcare Practitioners and Technical
Arts, Design, Entertainment, Sports,
and Media
Business and Financial Operations
Education, Training, and Library
Architecture and Engineering
Computer and Mathematical
Protective Service
Community and Social Service
Life, Physical, and Social Science
Farming, Fishing, and Forestry
Legal
Military Specific
Total

Total
Claims

1 to 4
Weeks

Number of Claims Receiving Benefit Payments*
5 to 12
13 to 26
27 to 52
53 to 76 More Than
Weeks
Weeks
Weeks
Weeks
76 Weeks

326,591
230,169
195,328
184,191
181,659
178,547
168,051
146,074

68,498
14,678
25,642
28,703
24,170
17,820
20,421
6,695

142,590
40,967
55,511
51,976
52,295
47,179
56,105
37,083

61,459
65,861
48,115
44,425
43,333
44,379
44,431
38,438

26,724
55,577
32,644
29,823
28,480
32,996
22,994
27,554

25,013
47,995
30,650
26,538
30,241
33,094
21,786
32,086

2,307
5,091
2,766
2,726
3,140
3,079
2,314
4,218

113,770
87,029
82,357
74,424

9,714
9,915
14,621
13,755

25,489
23,113
30,029
30,162

29,904
20,987
15,934
15,948

21,104
15,261
10,196
8,186

24,734
16,299
10,500
5,935

2,825
1,454
1,077
438

47,985
45,987
45,716
41,472
19,314
18,039
15,931
8,493
8,339
7,262
1,727
279,822

3,682
7,892
3,670
12,550
3,839
1,906
1,889
1,240
907
949
222
15,998

8,805
11,216
11,416
13,752
4,945
3,707
3,623
2,343
1,846
1,901
412
65,818

11,378
11,400
13,731
7,424
4,647
4,986
4,084
2,464
2,678
1,960
476
55,237

11,107
8,030
8,855
4,492
3,215
3,782
3,156
1,396
1,519
1,230
348
61,900

11,525
6,672
7,185
3,004
2,403
3,387
2,896
937
1,258
1,114
240
71,474

1,488
777
859
250
265
271
283
113
131
108
29
9,395

2,508,277

309,376

722,283

593,679

420,569

416,966

45,404

* Does not include Work Share Program claims or payment data for UC claims filed prior to January 1, 2020.
Source: The OAG created this exhibit with UIA provided data.

Michigan Office of the Auditor General
186-0319-21

UNAUDITED
Exhibit 10
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency (UIA)
Department of Labor and Economic Opportunity (LEO)
Total UC Benefit Payments by SOC Code Major Groups
For Claims Active from January 1, 2020 Through September 30, 2021

Food Preparation and Serving Related (35-0000)
Production (51-0000)
Office and Administrative Support (43-0000)
Sales and Related Occupations (41-0000)
Transportation and Material Moving (53-0000)
Management (11-0000)
Personal Care and Service (39-0000)
Construction and Extraction (47-0000)
Building and Grounds Cleaning and Maintenance (37-0000)

SOC Code Major Group

Healthcare Support (31-0000)
Installation, Maintenance, and Repair (49-0000)
Arts, Design, Entertainment, Sports, and Media (27-0000)
Healthcare Practitioners and Technical (29-0000)
Education, Training, and Library (25-0000)
Business and Financial Operations (13-0000)
Architecture and Engineering (17-0000)
Protective Service (33-0000)
Computer and Mathematical (15-0000)
Community and Social Service (21-0000)
Farming, Fishing, and Forestry (45-0000)
Life, Physical, and Social Science (19-0000)
Legal (23-0000)
Military Specific (55-0000)
Not Specified (N/A)
$0

Total UC Benefit Payments (In Billions)

* Does not include Work Share Program claims or payment data for UC claims filed prior to January 1, 2020.
Source: The OAG created this exhibit with UIA provided data.

Michigan Office of the Auditor General
186-0319-21

UNAUDITED
Exhibit 11
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency (UIA)
Department of Labor and Economic Opportunity (LEO)
Call Center Activity
From October 1, 2019 Through September 30, 2021

Prepandemic

Number (Percent) of
Claimant Contacts
Handled by UIA

October 2019
November 2019
December 2019
January 2020
February 2020
March 2020 (1st - 14th)

56,333
67,020
69,808
82,657
82,518
29,652

45,878
56,881
60,421
72,658
76,040
28,334

(81%)
(85%)
(87%)
(88%)
(92%)
(96%)

Pandemic

Month1

Number of
Claimant Contacts2

March 2020 (15th - 31st)
April 2020
May 2020
June 20203
July 2020
August 2020
September 2020
October 2020
November 2020
December 2020
January 2021
February 2021
March 2021
April 2021
May 2021
June 2021
July 2021
August 2021
September 2021

137,737
3,495,768
5,167,867
2,365,297
1,278,582
1,329,891
930,064
1,139,872
775,192
681,102
773,609
1,594,456
1,005,693
914,373
964,945
695,668
722,812
542,524
589,700

55,128
161,165
133,038
44,769
446,147
643,918
423,755
648,990
552,443
439,481
256,691
421,787
540,287
586,434
797,182
616,525
652,631
506,231
498,959

(40%)
(5%)
(3%)
(2%)
(35%)
(48%)
(46%)
(57%)
(71%)
(65%)
(33%)
(26%)
(54%)
(64%)
(83%)
(89%)
(90%)
(93%)
(85%)

Total

25,493,140

8,765,773

Includes weekly summary data for weeks ended in each month.
Includes connected calls and chats. Does not include calls receiving a busy signal.
3
Excludes data for the week ended June 27, 2020 because it was unavailable.
2

Source: The OAG created this exhibit with UIA provided data.

Michigan Office of the Auditor General
186-0319-21

AGENCY PRELIMINARY RESPONSES
CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency
Department of Labor and Economic Opportunity
Finding 1 Agency Preliminary Response and Auditor's Comments to
Agency Preliminary Response
This section contains UIA's preliminary response to Finding 1 and our auditor's comments providing further
clarification and context where necessary.
Overall Auditor's Comment
UIA's preliminary response indicates it has increased staffing and is in the process of making necessary revisions to MiDAS
that may result in intentional misrepresentation determinations on PUA claims. As noted in the Finding, the three-year
window for UIA to attempt to identify the cause of the billions of dollars in PUA overpayments and confirm intentional
misrepresentation starts to close in April 2023.
Finding 1: Intentional misrepresentation on PUA claims not established.
UIA provided us with the following response:

AGENCY PRELIMINARY RESPONSE

AUDITOR'S COMMENTS TO
AGENCY PRELIMINARY RESPONSE

We agree in part. The UIA agrees that in the midst of a
global pandemic there were opportunities for
improvement. There were also emergent demands for
new systems and processes. In the future, the Agency
will evaluate all claim types to create necessary
nonmonetary issues, send fact finding questionnaires
and make determinations of intentional
misrepresentation, as appropriate.
The Agency has followed UIA Manual Section 7930 and
all related procedures to identify instances of intentional
misrepresentation on claims that have a direct impact on
the Unemployment Insurance Trust Fund. These
procedures result in full due process rights for claimants.
During the current review period for the OAG Audit, the
Agency has issued over 3,200 intentional
misrepresentation determinations as of December 2022.
Furthermore, the Agency has utilized the funding
provided by the Department of Labor through
Unemployment Insurance Program Letter (UIPL) 28-20
and all related changes and has also utilized funding
provided by the Michigan Legislature to hire
Limited-Term Staff for program integrity functions. This
has increased the number of staff within the Agency that
perform these core program integrity functions, including
finding intentional misrepresentation. Limited-Term Staff

Michigan Office of the Auditor General
186-0319-21

The vast majority of overpayments UIA identified during
our audit period were for the federally funded PUA claims.
These statements from UIA have no relevance to UIA's
efforts to establish intentional misrepresentation for the
PUA overpayments cited in the Finding. Although it is
encouraging to learn UIA has issued intentional
misrepresentation determinations for non-PUA claims, we
cannot confirm the accuracy of the information provided
after our fieldwork or outside of our audit period.

serving in this capacity have a current service date
ending September 30, 2023. Finally, as noted by the
OAG, the Agency is in the process of making the
necessary changes to MiDAS to take administrative
steps and preserve due process rights to PUA claimants.
These actions may result in intentional misrepresentation
determinations on PUA claims.
The OAG stated that "UIA informed us it had not taken
any action to confirm the suspected fraudulent claims
identified by Deloitte were indeed fraudulent and to
recover the associated overpayments." This statement is
not entirely accurate as the UIA Fraud and Investigations
Division provided the team that performed the review of
the sample of the 15,000 claims.
Specifically related to the subparts of this finding:
•

Subpart a. - UIA is in the process of developing
a procedure whereby leadership collaborations
regarding key Agency decisions are formally
documented. In the event of significant
divergences, the issue will be brought forward to
LEO Executive Leadership for guidance.
Furthermore, since joining the agency in October
2021, the UIA director has established a weekly
cadence for executive leadership meetings with
a formalized process for identifying agenda
items and necessary decisions. At the same
time, the UIA director initiated a weekly
one-on-one meeting with each of the UIA
division administrators. That cadence has since
shifted to a biweekly schedule and includes a
template agenda requiring the division
administrators to identify needed approvals.
The agency has conducted a review and
revision of the Solution Request (SQR) process
with a focus on engaging the necessary subject
matter experts throughout the entire process and
clearly identifying ownership and next steps.
Finally, the UIA Director has a regular cadence
of meetings with LEO Executive Leadership to
discuss matters of concerns and to address any
key points of contention. Each of the above
touchpoints provides ample opportunity for
discussion and collaboration on key matters of
policy and procedure.

•

Subparts b. & c. - In the case of future Black Swan
events, such as the PUA program, the Agency will

include the Internal Controls Division and additional
consultation from executive leadership and other
outside parties, as deemed necessary, to ensure
proper system programming.

Michigan Office of the Auditor General
186-0319-21

UIA's Fraud and Investigations Division Administrator
informed us on August 25, 2022 that UIA staff assisted
Deloitte with contacting sampled claimants to obtain
additional information, and took no further action to flag
likely fraudulent claims in MiDAS or recover overpayments
due to the programming deficiencies identified in the
Finding.

As noted in the Finding, UIA discussed the related MiDAS
programming deficiencies in September 2020 and possibly
earlier. The three-year window for UIA to attempt to identify
the cause of the billions of dollars in PUA overpayments and
confirm intentional misrepresentation starts to close in April
2023.

CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency
Department of Labor and Economic Opportunity
Finding 2 Agency Preliminary Response and Auditor's Comments to
Agency Preliminary Response
This section contains UIA and LEO's preliminary response to Finding 2 and our auditor's comments providing
further clarification and context where necessary.
Finding 2: UIA needs to consistently apply its fraud controls.
UIA and LEO provided us with the following response:

AGENCY PRELIMINARY RESPONSE

AUDITOR'S COMMENTS TO
AGENCY PRELIMINARY RESPONSE

We agree that UIA should consistently administer fraud
detection and deterrence controls to ensure the integrity
of its UI programs. While the Agency's previous
decisions sought to balance fraud prevention and timely
payment to eligible claimants, we agree (as first
documented in the Deloitte Report released
November 25, 2020) that policy, technological, and
organizational changes increased the Agency's potential
exposure to fraud.
As noted above within the finding, fraud detection and
deterrence controls were fully restored by June 29, 2020.
Moving forward, UIA will continue to utilize and monitor
fraud detection and deterrence controls, including Fraud
Manager, referrals, and other means, to ensure
prioritization of UI program integrity. UIA has already
taken action to enhance its fraud risk management
capabilities to address those identified vulnerabilities in
the unemployment system.

As noted in the Finding, several of the controls did not
initially work as intended when UIA restored Fraud
Manager. We will further review the effectiveness of Fraud
Manager and UIA's efforts to pursue bad actors and those
who defrauded Michigan workers and businesses in our
upcoming audit of UIA's fraud and investigation activities.

Since the release of the first Deloitte Report in
November 2020, we have worked diligently to pursue
bad actors and those who defrauded Michigan workers
and businesses. This aggressive action has resulted in
109 executed search warrants, 94 pending cases, 90
individuals charged, 28 who have pled and 15 sentenced.
Further, the UIA requested and received supplemental
funding in the state budget to augment our already
vigorous fraud initiatives; participated in the U.S.
Department of Labor Tiger Teams program with an eye
toward enhancing our fraud initiatives, and prioritized
fraud deterrence capabilities in our recent Request for
Proposals (RFP) to replace our existing UIA computer
system.
Specifically related to the elements within this finding:
a.

We agree. Resources from most divisions
throughout the Agency were necessarily
reallocated to assist with the influx of claims

Michigan Office of the Auditor General
186-0319-21

at the peak of the pandemic. It is important to
note that UIA received requests from across the
legislature to speed up responding to claims and
getting payments out the door. Nationwide, UI
programs faced urgent calls to get relief to
workers.
We agree in part. Fraud Manager was still
running after an initial payment was issued. The
UIA temporarily reassigned key personnel in its
Investigations Division to help issue timely
payments to eligible claimants. The ID Director
and staff were transferred to assist with claims in
March 2020. The Agency reestablished the
Investigations Division on May 22, 2020,
assembled the State's Unemployment Insurance
Fraud Task Force on June 5, 2020, and
appointed retired Special Agent in Charge for
the U.S. Secret Service Jeffrey Frost as a
Special Fraud Advisor to serve on the task force
on June 30, 2020. The former Agency Director
reassigned several Benefits Division staff to the
ID (approximately 85-90 individuals) to assist
with fraud investigations.
b.

We agree. The UIA suspended first payment
review on claims, commonly referred to as the
"10-day hold requirement" which previously
allowed employers 10 business days to help
verify eligibility and respond to/dispute new
claims before being released for certification.
The removal was in line with actions taken by
other states and helped ensure the expedited
delivery of benefit payments. Though as a
result, UIA personnel had less ability and time to
review claims for eligibility before payments were
released. The Agency reinstated the 10-day
hold requirement for new claims on
September 24, 2020.

We agree. When the ID Director and key staff
returned, the first course of action was to
reinstate and add additional rules within Fraud
Manager. There are several filters used by
Fraud Manager to identify claims for additional
investigation or review. While the filter regarding
suspicious bank routing numbers remained,
many of these filters were turned off in April
due to concerns that they were incorrectly
identifying too many legitimate claims for review.
The Agency reactivated all filters on May 22,
2020, and additional filters were later added at
the recommendation of outside fraud
consultants. All claims filed during this period
were then re-run through Fraud Manager.
Cases of fraud were identified and investigated.
Referrals were made, and continue to be made,
to the DOL-Office of Inspector General,

Michigan Office of the Auditor General
186-0319-21

As noted in the Finding, UIA's former director requested all
but one of the rules used by Fraud Manager to be
temporarily suspended. Although Fraud Manager was still
running after initial payment was issued during this period,
it was limited to only identifying claims associated with
blacklisted bank routing numbers. In addition, as noted in
part d., a sequencing issue rendered Fraud Manager
ineffective at preventing potentially fraudulent payments
during this time because it only ran after UIA released
payment.

As noted in the Finding, several of the controls did not
initially work as intended when UIA restored Fraud
Manager.
We will further review the effectiveness of Fraud Manager
and UIA's efforts to pursue bad actors and those who
defrauded Michigan workers and businesses in our
upcoming audit of UIA's fraud and investigation activities.

Department of Attorney General, and other law
enforcement agencies that participate as part of
the UI Fraud Task Force. Under Executive
Directive 2021-14, the Agency is required to do
the following: "Consistently use Fraud Manager,
or similar technology, to detect anomalies that
indicate a claim requires further review prior to
payment. Fraud Manager, or similar technology,
must not be suspended for any reason without
prior approval from the Director of the
Department of Labor and Economic
Opportunity."
d.

We agree that effective change controls should
be fully implemented over the MiDAS and
MiWAM applications and data to ensure all
system changes are authorized and operating as
intended before implementation. UIA is in the
process of developing a change management
procedure to address these findings. The UIA
re-sequenced the claims payment process so
that claims and certifications (regardless of type)
are run through Fraud Manager prior to being
paid (effective as of May 19, 2020).

We remain committed to righting past wrongs at the state
and federal level and making sure that money goes to
eligible workers. The Agency has strengthened its efforts
to combat fraud and continues to collaborate with the
Department of Attorney General as well as with our local,
state, and federal law enforcement partners.

Michigan Office of the Auditor General
186-0319-21

CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency
Department of Labor and Economic Opportunity
Finding 3 Agency Preliminary Response and Auditor's Comments to
Agency Preliminary Response
This section contains UIA and LEO's preliminary response to Finding 3 and our auditor's comments providing
further clarification and context where necessary.
Finding 3: Improvement needed to ensure claimants meet federal eligibility criteria.
UIA and LEO provided us with the following response:

AGENCY PRELIMINARY RESPONSE

AUDITOR'S COMMENTS TO
AGENCY PRELIMINARY RESPONSE

We agree the UIA should accurately determine claimant
eligibility for UC benefits in accordance with the
requirements associated with each program and should
an expired program such as this ever be enacted again
the agency will be prepared.
The pandemic presented real time challenges for which
Unemployment Insurance Agencies nationwide were ill
prepared. At the start of the pandemic, the Michigan
Unemployment Insurance Agency (UIA) responded
quickly and with empathy to calls from both the
legislature and claimants to get payments out the door
and into the accounts of Michigan workers. The
Michigan UIA was not alone in the challenges it faced.
However, Michigan is uniquely equipped to respond and
rectify these issues and has already begun the process
of doing so.
As noted above, UIA has taken dramatic steps to build
upon and improve our internal controls. In prior audits the
OAG received from the UI Director a firm commitment to
adhere to documented approval paths moving forward for
all program areas. The unwavering assurances offered
in the UIA response to the Personnel Management
Processes Audit released in March 2022 apply here as
well.
The UIA is committed to ensuring that all workers who
are eligible for benefits receive those benefits. Accuracy
and efficiency are central to the success of any UI
program and the determination of eligibility for
unemployment compensation benefits in accordance with
the associated requirements. However, it cannot be
stressed enough how greatly the UIA is hamstrung
by the limitations and support of our current
database. The same system limitations noted in the
response to the ninth finding continue to plague the
agency's ability to respond in a timely manner to the
concerns noted in this one. Wholesale change is
necessary to the UIAs operating system in order to
deliver the level of service Michigan workers and
businesses expect.
Michigan Office of the Auditor General
186-0319-21

The improper payments noted in this finding relate
specifically to UIA's deficient internal control to accurately
determine claimant eligibility. As noted in the Finding, UIA
informed us it bypassed established procedures. In
addition, as noted in Finding 10, UIA stated its former
director and others lacking in-depth knowledge of UC
developed and designed the PUA application and
processing methodology without assistance from more
knowledgeable managers and staff. While we have no
comment on UIA's contention it is hamstrung by the
limitations and support of its current database, it has little
relevance to the internal control deficiencies that caused
these claimant eligibility issues.

On November 15, 2022, the UIA announced it has
chosen a new contractor to design and install a modern,
innovative, user-focused unemployment insurance
computer system that prioritizes ease of access for
workers and employers while also streamlining jobless
claims processing. The new system will replace the
Michigan Integrated Data Automated System (MiDAS),
first put into use nearly a decade ago under former Gov.
Rick Snyder.
UIA will accurately determine claimant eligibility for
unemployment compensation benefits in accordance with
each program by establishing requirements in
accordance with statutory guidance. Where UIA believes
the requirements to be unclear or that there is any
ambiguity in the requirements, guidance will be sought
from the United States Department of Labor (USDOL) to
ensure UIA is properly implementing the requirements.
Beginning in October 2021, the UIA required managers
to perform quality reviews of each employee's work to
ensure claims are processed properly. Managers work
closely with staff who need improvement to ensure they
receive the support needed to meet quality standards.
The Benefits Customer Service and Operations Divisions
are refining a training plan that ensures all staff are
trained appropriately for the work they are assigned. The
plan includes additional practice time where staff will
work in pods and have immediate access to assistance
as questions arise ensuring a higher quality of support
and follow-through once training is complete. An
important component of the training materials will
emphasize the necessity of making system notes
supporting a particular determination.

Michigan Office of the Auditor General
186-0319-21

CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency
Department of Labor and Economic Opportunity
Finding 4 Agency Preliminary Response and Auditor's Comments to
Agency Preliminary Response
This section contains UIA's preliminary response to Finding 4 and our auditor's comments providing further
clarification and context where necessary.
Overall Auditor's Comment
While UIA's response includes extraneous information and legal jargon, it lacks any mention of its intentions related to our
recommendation that UIA seek legal guidance regarding its position claimants who selected unauthorized criteria could not
have committed fraud. As we noted in Finding 1, UIA had not found fraud or intentional misrepresentation for PUA
overpayments essentially because it had not looked. By its own admission in its response to Finding 5, "…the Agency has
not established intentional misrepresentation on these claims…" and "Should intentional misrepresentation be established
along with an overpayment, claimants would be ineligible for a waiver." UIA's response below indicates imposters filing
claims using identities that were not their own and individuals knowingly using false information to obtain benefits could not
have committed fraud if they also selected one of the unauthorized criteria UIA had included on the applications. We do not
believe federal and state law support this position, and thus we recommend UIA seek legal guidance.
Finding 4: Improvements needed to UIA's PUA requalification, recertification, and overpayment waiver processes.
UIA provided us with the following response:

AGENCY PRELIMINARY RESPONSE

AUDITOR'S COMMENTS TO
AGENCY PRELIMINARY RESPONSE

We agree in part with this finding. UIA agrees that it
should improve administration over the remaining PUA
requalification and recertification activities, as well as
reviews of PUA overpayments for possible waivers. UIA
disagrees with characterizations of certain processes and
various sub-findings as specified below and provides
clarity as follows.
Through the worst of the pandemic, UIA worked to
quickly provide claimants with the benefits they were
owed, despite shifting and unclear federal guidelines and
a historic number of Michigan workers claiming benefits
from new federal programs.
The pandemic presented real-time challenges for which
Unemployment Insurance Agencies nationwide were ill
prepared. At the start of the pandemic, UIA responded
quickly and with empathy to calls from both the
legislature and claimants to get payments out the door
and into the accounts of Michigan workers. The
Michigan UIA was not alone in the challenges it faced.
However, Michigan is uniquely equipped to respond and
rectify these issues and has already begun the process
of doing so.
USDOL guidance in UIPL 20-21 and UIPL 20-21,
Change 1 provides that overpayments can be waived

Michigan Office of the Auditor General
186-0319-21

and that states could waive overpayments under state
law. USDOL further noted that if a state's law did not
have a definition of equity and good conscience, the
federal definition should be used. Michigan does have a
state law applicable to waivers, and that state law does
include a definition of equity and good conscience that is
defined by law as three things, one of them being
overpayments due to the agency's error. Subsequently,
overpayments resulting from an individual having
selected one or more of the invalid PUA eligibility
reasons erroneously included on the application and
certification for PUA benefits were waived on the basis of
agency error as required in Section 62(a) of the MES Act.
The UIA followed DOL guidance and state law when
identifying those individuals who were improperly paid
benefits.

UIA's response omits a critical component of the MES Act
that could undermine its position. Section 62(a) of the
MES Act states, "Except in a case of intentional false
statement, misrepresentation, or concealment of material
information, the unemployment agency shall waive
recovery of an improperly paid benefit if repayment would
be contrary to equity and good conscience and shall waive
any interest." Many claimants likely were ineligible for the
payments they received, through no fault of their own.
However, the prevalence of fraudulent submissions widely
reported and acknowledged by UIA, result in the potential
for many claimants to fall within the exception to the
automatic waiver allowed by law and therefore not be
entitled to a waiver.

UIA disagrees that it "missed opportunities to identify
imposter claims, claimants misrepresenting their
attachment to the workforce, and other issues." This
assumption is speculative and inappropriately shifts
liability to claimants who were improperly paid as a result
of UIA error. The waiver provision of Section 62(a) is not
permissive. The statute provides that UIA shall waive an
overpayment that is the result of agency error. Any
assertion otherwise is not supported by statute.

As previously noted, UIA does not mention a critical
component of the MES Act that precludes UIA from
granting waivers for fraudulent claims. Our contention that
UIA likely missed opportunities to identify imposter claims,
claimants misrepresenting their attachment to the
workforce, and other issues is not speculative. Instead, it is
based on factual information obtained from UIA's records,
reviewed as part of our audit sampling, and presented
within this Finding and other Findings in this report.

With respect to the finding subparts (a.-e.):
a.

The UIA disagrees. Adjudication issues opened
after the erroneous payment neither should nor
could have resulted in enforcement of the debt
and collection against these claimants. The
issues for adjudication were opened on
erroneously established claims and were closed
without adjudication prior to application of the
waiver.

Had the claims been denied properly,
adjudication issues would not have been
created, as issues cannot be generated on
denied claims.
Further, the process for identifying an imposter
claim; verifying workforce attachment, when
applicable; or a fraud investigation were not
impeded. Absent a finding of either of these
issues through an agency determination after
fact-finding an investigation, a waiver can be
considered where the established overpayment
is final (meaning it is subject to collection).
There was no agency determination of either of
the above associated with claims or
overpayments on which a waiver was granted.
Michigan Office of the Auditor General
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As previously noted, the MES Act provides for an exception
to the blanket application of waivers due to agency errors if
there is claimant fraud. Further, UIA's contention does not
reconcile with known actions it has taken to date, albeit in
an inconsistent manner. UIA has rescinded waivers
granted as part of the PUA requalification process when it
determined the claims may be fraudulent. In one example,
a claimant received the overpayment waiver in July 2021
for overpayments totaling $25,000 related to the PUA
requalification. In March 2022, UIA opened a fraud
investigation on the claim, rescinded the waiver and left a
note in MiDAS on the claim stating, "CARES Waiver
reversed to allow for restitution".
UIA cannot generate issues on denied claims due to the
way UIA programmed MiDAS. As UIA states in its
response to Finding 5 below, it is exploring a mechanism to
establish intentional misrepresentation on denied claims.

By closing the eligibility issues without adjudication, the
process of determining eligibility and potential fraud was
impeded.

UIA disagrees. The categories of claimants
included in requalification and recertification
included (1) those who had been denied PUA
benefits as a result of a claim application filing or
bi-weekly certification, and (2) those who were to
be denied as a result of having selected one or
more of the invalid PUA eligibility reasons
erroneously included by UIA in the original PUA
application and certification. UIA included the
latter group in the requalification / recertification
because if the individual responded with a valid
PUA eligibility reason on application or
certification, the individual would remain eligible
for PUA benefits, and no overpayment would be
established. For individuals who did not respond
or who responded but still did not have a valid
PUA eligibility reason, overpayments were
established and subsequently waived. For
clarity, if an eligibility or qualification issue exists,
an issue is opened to be adjudicated by UIA.
The result of the adjudication is that an individual
is eligible, not eligible, or partially eligible, or
qualified or disqualified for benefits. As noted
above, UIA does not agree or believe that it
should have first adjudicated issues opened on
an erroneously established claim to enforce
collection against claimants who were only paid
as a result of UIA's error. Consequently, UIA
disagrees with OAG's speculative estimate of
$1.847 billion (i.e., $1.7 billion + $147 million) in
potentially improperly waived overpayments.
The overpayments were properly waived in
accordance with state law that requires waiver of
overpayments that were the result of agency
error.
UIA remains confident that the resulting waivers
were properly granted in accordance with state
law and USDOL requirements, as overpayments
were waived that were not determined to be
fraudulent by UIA or the result of fault as
identified by USDOL. As the USDOL guidance
made clear that overpayments could be waived
under state law, UIA did not believe it was
necessary to seek USDOL guidance on
interpretations of state law. There is no statutory
provision or guidance that provides that an
improper payment originating from the Agency's
error subsequently becomes subject to
enforcement against the recipient of the
improper payment because the Agency opens
issues after the improper payment has occurred
to determine whether an individual met
additional eligibility or qualification requirements.

Michigan Office of the Auditor General
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UIA's response does not identify the basis for disagreeing
with the facts as presented regarding our review of the 5
waivers. As noted in the Finding, UIA determined the
claimants were ineligible or not qualified for PUA, for
reasons other than the unauthorized eligibility criteria. Our
estimates are not speculative. The practice of projecting
error rates from a random sample to the overall population
is in line with professional auditing standards and used
extensively in the auditing industry. Afterall, UIA has not
appeared to challenge the $8.4 billion estimated fraudulent
claims reported in the Deloitte report, yet clearly the
Deloitte team did not review every claim in reaching its
estimate.

As noted in Finding 1, UIA made only minimal effort to
identify fraudulent PUA claim overpayments.

The majority (if not all) of the eligibility issues noted in the
Finding were created by UIA prior to UIA granting the
overpayment waiver. Either before or after the waiver was
granted, UIA adjudicated and determined the claimants
were ineligible or not qualified for PUA, for reasons other
than the unauthorized eligibility criteria. Therefore, UIA
either knowingly waived or did not rescind waivers for
potentially fraudulent claims. As previously noted, the
waiving of fraudulent claims is specifically precluded by the
MES Act and federal guidance.

UIA agrees in part. The first two weeks of
benefits payable are chargeable to the federal
government as specified by USDOL. For
individuals who were improperly paid those
benefits as a result of the Agency's error, those
overpayments were properly waived. As a
result, UIA disagrees with this portion of the
finding.
UIA agrees that it improperly waived some
weeks of benefits paid as a result of a claimant's
certification for which they were, in fact, eligible
for payment and that the amount of waiver was
improperly communicated to some claimants
due to an error that was subsequently identified
and corrected. The UIA has since taken action
to improve and clarify internal communications
and training for staff.

UIA disagrees. UIA used consistent
methodology to requalify all claimants using
responses to all initial PUA applications and
weekly certifications to requalify. Using these
two types of responses ensures that every
certification period on a PUA claim was covered.
The response on the certification overrides the
responses on the additional claim filing.

UIA agrees that it did not accurately
communicate the requalification and
recertification process in its letters and notices,
as the error in the letter was an oversight and
lack of attention to detail, not the result of
disagreement or confusion. UIA is working with
its communications partner to improve overall
clarity in claimant communications.
However, UIA disagrees that this was the result
of confusion in understanding between senior
management. OAG speculates that the letter
"demonstrated apparent confusion between UIA
senior management with different
understandings of the criteria used to identify
claimants" for the requalification and
recertification process. Any varying explanations
between managers could occur as each
manager is assigned to a different Division and
area within a Division. While it is expected that
all managers have general knowledge of each
area, it is not, and should not, be expected that
every manager should be able to provide
specific detail related to matters over which they
may have no authority.

Michigan Office of the Auditor General
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It is unclear how UIA's reference to the first two weeks of
benefits payable being chargeable to the federal
government is relevant to this Finding. All PUA benefits
were chargeable to the federal government. This portion of
the Finding relates to UIA's overstatement of overpayments
and related waivers due to a flawed calculation
methodology. Given UIA's agreement with this part of the
Finding, and stated action it has taken, the basis for any
disagreement is unclear.

In March 2022, the OAG provided UIA with the 107,800
and 34,800 claims identified in the Finding that met UIA's
requalification and recertification criteria. UIA had not
identified these as claims needing to requalify and/or
recertify, and therefore, did not treat them consistently.
Regarding UIA's contention the response on the
certification overrides the responses on the additional claim
filing for the 34,800 claims, we note in the Finding this
methodology was inconsistent with that used for other
claimants for whom UIA established overpayments based
only on reasons included on the claimants' original
applications.

We discussed this matter on multiple occasions with the
UIA senior leadership UIA directed us to, and who should
have been able to accurately explain how UIA identified
claimants who needed to requalify and/or recertify. UIA's
inference we asked the wrong individuals is unfounded.

OAG states that UIA has not provided information related
to recent waivers granted. This posture is in direct
contradiction to discussions between the UIA director and
OAG staff beginning in early February 2022. On
February 4, 2022, the UIA director provided the following
response to an email inquiry from Senior Audit
Supervisor Chad Monger.
Good afternoon. As you can imagine, the
question of waivers is one garnishing a lot of our
time and attention. Several of the questions you
raise are discussions we are having internally
amongst ourselves and are still seeking answers
to. I have been in recent conversations with
leadership at the national office of the DOL
requesting additional guidance on this issue.
You might also be aware that NASWA sent a
letter (attached) to Capitol Hill on behalf of its
members. We have good reason to believe that
additional guidance is forthcoming and would
ask that you would allow our team time as we
continue our own analysis and can consume
anything that DOL might publish. I can assure
you that we are open to meeting with the OAG
but would prefer to do so when we are able to be
better equipped and informed.
On February 17, 2022, in response to another inquiry
from Mr. Monger just two weeks later, the UIA director
responded again to the OAG.
We submitted close to a dozen questions to DOL
regarding the recent guidance; these questions
include direction related to the waivers granted
thus far. As you may or may not be aware we
are currently working to address several issues
impacting a significant number of claimants. As
you can appreciate there is a fair amount of
urgency in addressing issues related to 1099s,
waivers and collection activity. At this time, I am
requesting a 30-day extension on your questions
and requests to meet regarding the topic of
overpayment waivers.
The UIA is committed to partnering with the OAG
and believe we have demonstrated that in my
relatively short tenure. We appreciate your
consideration and patience in this.
Following this second inquiry a meeting was setup
between the UIA director and the Chief Investigator for
the OAG on February 22, 2022, to discuss the audit of
waivers. During that conversation the Chief Investigator
offered assurances to the UIA director that the present
audit would only include a review of those waivers issued
in fall 2021. This position was reflected in a follow-up
email from the UIA director on May 17, 2022, to the OAG
Chief Investigator, following yet another request for
information from Senior Audit Supervisor Chad Monger.
Allen Williams, the Director of Internal Controls for the

Michigan Office of the Auditor General
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We cite in the Finding UIA did not provide information
specifically related to 55,000 waivers it granted in May
2022. UIA has no legal authority to deny the OAG's access
to records. The OAG's Constitutional and statutory
authority is broad within the context of conducting audits,
as evidenced by State statute requiring agencies to
produce records upon our demand.
The e-mails UIA has included in its response depict the
UIA Director responding directly to our inquiries related to
how UIA had established waivers and a meeting was
necessary in February 2022 between the UIA Director and
OAG senior leadership to reach agreement that UIA would
provide information specific to waivers it had granted in
2021. Any assertions made by the OAG in February 2022
to the UIA Director were based on the circumstances and
status of the audit at that time. UIA stated in February
2022 it did not know when or how the next round of waivers
would occur, which is evident in the e-mails in UIA's
response. After the OAG learned of the 55,000 waivers
through a press release issued by UIA on May 4, 2022, we
requested information to identify the population of
claimants and to learn how UIA had established eligibility
for those specific claimants. Even though UIA had already
made decisions and approved waivers of $431 million
regarding this population, essentially completing the
process for these claims, UIA refused to identify the
claimants or explain how it reached those decisions under
the premise the process was ongoing. We acknowledge in
the Finding UIA may issue additional waivers, but it had
already issued the 55,000 waivers.
The specific inquiries we made in February 2022 that
resulted in the e-mails from the UIA Director related to
UIA's policies and procedures for granting overpayment
waivers, communications with and guidance provided by
USDOL concerning the waivers, details concerning the
2021 waivers, and general information regarding potential
future overpayment waivers. UIA only provided detail
concerning the 2021 waivers.
On May 10, 2022, six days after UIA's press release
concerning the $431 million in overpayment waivers to
55,000 claimants, we sent UIA a request for the detail
concerning them. On May 13, 2022, after no response, we
sent UIA a follow-up request for updated details concerning
all overpayment waivers UIA had issued.
The UIA Director's May 17, 2022 e-mail is the only
response we received.

Department of Labor and Economic Opportunity, was
copied on this communication.
Bryan,
Good afternoon. Our staff received the attached
requests regarding our most recent effort
regarding waivers. When we spoke a couple of
months back concerning the initial waiver
request you had agreed that the OAG scope
would be focused on the waivers that occurred
last fall.
UIA is working with FAST and DTMB to rollout
another series of waivers, it is an ongoing
process with developers that is expected to carry
us at least through the Fourth of July. This effort
requires a fair amount of work as we analyze the
various populations and determine eligibility. It
also includes our own internal audits as we work
through each effort.
When the process is complete, we would be
happy to respond to any requests you may have
but at this time to do so would be premature.
Sincerely,
Julia Dale (she, her, hers)
UIA repeatedly made clear to the OAG that it was in the
very difficult and labor-intensive process of evaluating
waiver populations and issuing waivers. Consideration of
a waiver applies to all overpayments and not just those
related to PUA requalification and recertification.
Congruent with OAG's audit, UIA has continued to
evaluate overpayments to determine if a waiver should
be applied in accordance with state law or USDOL
guidance to avoid unnecessary collections against
claimants. Given the volume of overpayments for
consideration, UIA resources are dedicated to identifying
potential waiver populations and applicability of waivers
for overpayments on all federal claim types, not just PUA.
At the end of this process, UIA will provide additional
information to OAG for review.

Michigan Office of the Auditor General
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CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency
Department of Labor and Economic Opportunity
Finding 5 Agency Preliminary Response and Auditor's Comments to
Agency Preliminary Response
This section contains UIA's preliminary response to Finding 5 and our auditor's comments providing further
clarification and context where necessary.
Finding 5: UIA needs to ensure claimants' prior attachment to the workforce.
UIA provided us with the following response:

AGENCY PRELIMINARY RESPONSE

AUDITOR'S COMMENTS TO
AGENCY PRELIMINARY RESPONSE

We agree that benefit payments should go to eligible
workers. We also agree that with the ever-changing federal
guidelines it is likely that certain PUA claimants may have
misrepresented their eligibility. Early in the PUA program the
DOL required that states allow self-attestation as an
alternate factor for determining eligibility. This mandate
greatly diminished UIA's ability to ensure that individuals who
filed PUA claims only received benefits in accordance with
statutory provisions.
UIA agrees with this finding and has taken steps to improve
UIA's program eligibility determination processes, resolve
outstanding overpayments, and increase the identification
(and possible legal referral) of PUA claimants who
intentionally misrepresented their eligibility. This finding is a
direct result of the global pandemic and involves a hastily
established federal program created to get much needed
payments into the hands of workers and their families;
money used to keep roofs over their heads, purchase
needed medications and keep food on the table. Political
leaders of both parties told UIA to do everything in its power
to urgently provide unemployment benefits to the millions of
Michiganders who lost their jobs virtually overnight. We
proudly did so. The volume of claims filed in the spring of
2020 peaked with a high of over 388,000 in a single week,
compared with just 5,000 claims before the pandemic and a
weekly high of 77,000 claims during the Great Recession.
On October 7, 2020, the Agency implemented a Reasonable
Suspicion policy and trained staff on the policy. Additionally,
UIA completed the PUA Treasury crossmatch to identify PUA
claimants, at a point in time, who were likely attached or
were likely not attached to the workforce. Solution requests
(SQRs) were developed to open remuneration cases,
identity verification, and employment verification.
Furthermore, additional crossmatches were run against PUA
claims and non-monetary issues were opened. This resulted
in $2.3 billion in overpayments being established as of
November 2021 for the PUA claimants identified in the
Treasury crossmatch performed in November 2020.
Though overpayments were established, the Agency has not

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As noted in the Finding, UIA did not take immediate
action to address the population of 314,000 claimants
identified in the Treasury crossmatch results received in
early November 2020. Although UIA notified impacted
claimants in February 2021, it generally did not begin its
verification efforts until between May and December
2021. UIA continued to pay these claimants until it
completed its verification efforts.
We identified these MiDAS programming deficiencies in
parts b. and c. of Finding 1. UIA has been aware of
these issues that preclude it from establishing intentional

established intentional misrepresentation on these claims
due to a lack of programming within the MiDAS system. As
a result, these overpayments have been waived or are being
considered for waivers.
In 2022, we waived more than $555 million in overpayments
on 76,000 claims and still have waiver implementation
projects in progress. In 2021, we waived more than
$3.5 billion in overpayment debt related to federal pandemic
jobless benefit programs on 345,000 claims.
The Agency is creating a non-monetary issue that will
generate a fact-finding form for certain PUA claimants.
Creating this non-monetary issue may lead to an
overpayment and intentional misrepresentation
determination being established on many PUA claimants.
Should intentional misrepresentation be established along
with an overpayment, claimants would be ineligible for a
waiver. Upon implementation, the non-monetary issue will
be created, the Investigations Division staff will investigate
PUA claimants who likely misrepresented their attachment to
the workforce, and appropriate action will be taken. In
addition, the Agency is exploring a mechanism to establish
intentional misrepresentation on denied claims. The Agency
has three years from initial payment to establish intentional
misrepresentation. UIA will also consider performing an
additional crossmatch with the Department of Treasury for
the entire pandemic assistance period to assist with
determining workforce attachment, identifying potential
remuneration issues, or other available actions.

Michigan Office of the Auditor General
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misrepresentation on PUA claims since at least
September 2020. In addition, we identified UIA had
improperly issued waivers in Finding 4. UIA's
acknowledgment here it has waived or is considering
waiving overpayments identified in the Treasury
crossmatch population is concerning given the explicit
language in federal and state law that preclude UIA from
issuing waivers for fraudulent claims, which include
intentional misrepresentation. Given UIA's intentions as
described below to create a non-monetary issue that will
generate a fact-finding form for certain PUA claimants it
is likely UIA will need to consider rescinding waivers it
has previously granted. As noted in Finding 1, the
three-year window for UIA to attempt to identify the
cause of the billions of dollars in PUA overpayments and
confirm intentional misrepresentation starts to close in
April 2023.

CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency
Department of Labor and Economic Opportunity
Finding 6 Agency Preliminary Response and Auditor's Comments to
Agency Preliminary Response
This section contains UIA's preliminary response to Finding 6 and our auditor's comments providing further
clarification and context where necessary.
Finding 6: Improvements needed to UIA's benefit payment review (BPR) process.
UIA provided us with the following response:

AGENCY PRELIMINARY RESPONSE
We agree in part. UIA agrees with the findings above
but disagrees with the numbers reported.
The pandemic presented real time challenges for which
Unemployment Insurance Agencies nationwide were ill
prepared. At the start of the pandemic, the Michigan
Unemployment Insurance Agency (UIA) responded
quickly and with empathy to calls from both the
legislature and claimants to get payments out the door
and into the accounts of Michigan workers. The
Michigan UIA was not alone in the challenges it faced.
However, Michigan is uniquely equipped to respond and
rectify these issues and has already begun the process
of doing so.
The task inventory report is used to determine the
number of Benefit Payment Reviews completed in one
day by an individual manager. However, the task
inventory report identifies the individual who was
assigned the Benefit Payment Review (BPR), not the
individual who actually processed the BPR, an important
distinction.
a.

Agree: The Agency was and remains committed
to getting payments out to eligible claimants in a
timely manner. UIA increased the threshold to
$11,000 for BPRs in April 2020 anticipating the
potential weeks of delay in unemployed workers
filing an application for benefits. UIA's online
portal, MIWAM, and its Contact Center could not
immediately offer enough capacity for all
unemployed workers to access services, such as
filing an initial application.

Agree: The agency will ensure workflow
includes examiner eligibility review prior to the
creation of a BPR for future new unemployment
programs. It cannot be emphasized enough that
the volume of claims filed in the spring of 2020
peaked with a high of over 388,000 in a single
week, compared with just 5,000 claims before
the pandemic and a weekly high of 77,000

Michigan Office of the Auditor General
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AUDITOR'S COMMENTS TO
AGENCY PRELIMINARY RESPONSE
We provided UIA with the detail supporting the numbers
reported in this Finding on July 8, 2022, and UIA did not
dispute the numbers or provide additional data for us to
consider during or after our fieldwork. UIA does not identify
which numbers it disagrees with in its response.

The Benefits Section Administrator and Adjudication
Manager informed us on April 7, 2022 that UIA did not
monitor how many BPRs were assigned or completed by
each UIA staff member. The task inventory report has no
relevance to the issues noted in this Finding.

claims during the Great Recession. The UIA
was and remains committed to getting claims
paid to eligible workers. With this context it is
important to note that the BPR process is one of
many internal control tools; it is not, nor was it
ever intended to be, a part of review for
eligibility. Prior to the pandemic, staff notified
their manager of a pending BPR, explained the
circumstances resulting in a BPR, and the
manager would confirm the circumstances and
ensure legitimacy of payment. A BPR was never
created without an eligibility review by a frontline
examiner. With the implementation of the
Pandemic Unemployment Assistance (PUA)
program, BPRs were created immediately upon
application without any review by an examiner
which then required a manager to complete an
eligibility review versus a manager review.
c.

Agree: As noted above, UIA has taken dramatic
steps to build upon and improve our internal
controls. In prior audits, the OAG received from
the UI director a firm commitment to adhere to
existing internal controls and documenting key
decisions for all program areas. The unwavering
assurances offered in the UIA response to the
Personnel Management Processes Audit
released in March 2022 apply here as well.

Agree: At the height of the pandemic the UIA
was committed to getting money out the door to
eligible workers. The volume of claims filed in
the spring of 2020 peaked with a high of over
388,000 in a single week, compared with just
5,000 claims before the pandemic and a weekly
high of 77,000 claims during the Great
Recession. Since March 15, 2020, over $40
billion in benefits has been paid to 3.5 million
workers. At the height of the pandemic, the
number of customer-facing staff more than
quadrupled. Before the pandemic, the UIA had
around 650 staff; at its peak, nearly 3,000 UIA
team members were helping claimants. The
OAG knows this fact all too well as it went to
great lengths to document it in the Personnel
Management Audit released earlier this year.

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The agency provided instructions to managers on
processing BPRs on July 24, 2020, and provided training
on processing BPRs beginning on December 10, 2020,
after release of corrected official agency PUA Guidance
and Reasonable Suspicion policy. Benefits leadership
halted the processing of PUA BPRs in August 2020 due
to the lack of official agency guidance. The agency
agrees that training is necessary and it has been
provided to all current managers. It will ensure training
occurs with new managers moving forward. The agency
will ensure workflow includes examiner eligibility review
prior to the creation of a BPR for future new
unemployment programs. Additionally, Benefits
Leadership will conduct quarterly reviews of BPR
processing to ensure both quality of review and quantity
does not exceed reasonable expectations. Finally, it is
important to note that the Agency took disciplinary action
against the manager referenced in the above audit
findings.

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According to data we obtained from UIA, UIA staff
completed between 105 and 449 BPRs per day on PUA
claims, averaging 210 per day, for work days between
August 1, 2020 through December 9, 2020. Benefits
leadership was unable to provide us with any
communications to staff to halt the BPRs, and according to
the data, staff continued to process them.

CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency
Department of Labor and Economic Opportunity
Finding 8 Agency Preliminary Response and Auditor's Comments to
Agency Preliminary Response
This section contains UIA's preliminary response to Finding 8 and our auditor's comments providing further
clarification and context where necessary.
Finding 8:

Wage crossmatch leads require follow-up.

UIA provided us with the following response:

AGENCY PRELIMINARY RESPONSE

AUDITOR'S COMMENTS TO
AGENCY PRELIMINARY RESPONSE

We agree in part. The quarterly crossmatch is an
important tool in detecting potential overpayments. It is
one of many in the UIA arsenal. We agree that all
federally required quarterly crossmatch leads should be
followed up on to detect possible overpayments.
The pandemic presented real time challenges for which
Unemployment Insurance Agencies nationwide were ill
prepared. At the start of the pandemic, the Michigan
Unemployment Insurance Agency (UIA) responded
quickly and with empathy to calls from both the
legislature and claimants to get payments out the door
and into the accounts of Michigan workers. The
Michigan UIA was not alone in the challenges it faced.
However, Michigan is uniquely equipped to respond and
rectify these issues and has already begun the process
of doing so.
Contrary to the assertions in the above finding, the UIA
did indeed identify, document, and pursue resolution
when it became aware of inconsistencies in the
generation of crossmatch leads. On February 14, 2020,
at the beginning of the pandemic, the UIA submitted a
Solution Request (SQR) documenting issues with the
crossmatch system failing to create consistent leads.
The SQR was created following conversations with
developers on the FAST Enterprises (UIA's current
system vendor) team that an SQR was necessary to
remediate the issue. On February 19, 2020, the SQR
was assigned to a developer for work. Less than one
month later the Pandemic Emergency Declaration was
made. The assigned developer never made progress on
this SQR and eventually ended their role supporting the
UIA.

We note in the Finding UIA had been aware of the
technical issue within MiDAS since September 2019 which
prevented it from fully conducting the wage crossmatches.
UIA informed us during our fieldwork it did not prioritize a
fix because of the onset of the pandemic, expanded
eligibility for UC, and the significant increase in UC claims.
Hence, the Finding is not significantly different or "contrary"
to the verbiage UIA included in its response. UIA's
response implies a disagreement that does not exist.

Resolution of the crossmatch issue revealed multiple
failures of the technical systems and processes. These
failures existed outside of the scope of UIA staff
oversight. These failures further highlight the challenges
the current MiDAS system presented and continues to
present to both UIA and Michigan workers. On

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November 15, 2022, the UIA announced it had chosen
Deloitte to design and install a modern, innovative,
user-focused unemployment insurance computer system
that prioritizes ease of access for workers and employers
while also streamlining jobless claims processing. The
new system will replace the Michigan Integrated Data
Automated System (MiDAS), first put into use nearly a
decade ago under former Gov. Rick Snyder.
When remediating the late crossmatch discoveries, the
Agency performed the crossmatches for all prior quarters
that had previously errored. These crossmatches were
performed on all state claims. This resulted in factfinding forms being sent to claimants and their employers
seeking additional information for the benefit weeks in
question. These fact-finding forms ask claimants and
their employer for the gross wages earned for each week
in question.
As responses are received, Agency staff adjudicate the
issues based on responses from claimants and their
employer. When there are no responses or insufficient
responses, additional reasonable attempts are made to
gather information. In many instances, overpayments
are identified and then established due to a claimant
receiving unemployment benefits for a given week or
weeks and either failing to report or underreporting their
gross earnings for that week.
In March 2022, issues with wage crossmatch were
resolved. UIA has since revisited the systems and
process for monitoring future failures with our IT partners.
The crossmatches are run in a weekly job stream. When
the job fails, an SQR is opened for follow up. Since the
crossmatch jobs have been restored and running, only
one intervention has been opened, worked, and closed to
ensure UIA creates crossmatch cases for review in a
timely manner. UIA will continue to follow this process to
ensure the jobs successfully run and leads are reviewed.
As of September 1, 2022, the Agency has written over
2,000 intentional misrepresentation determinations since
we remediated the late crossmatch discoveries.

As noted in the Finding, as of October 2022, UIA had only
adjudicated 1 out of 25 nonmonetary issues from its March
2022 wage crossmatch results we randomly selected. UIA
did not inform us or provide information during or after our
fieldwork related to the 2,000 intentional misrepresentation
determinations it mentions in its response, and therefore,
we did not validate this information.

UIA will continue to follow this process to ensure the jobs
successfully run and leads are reviewed. In addition, UIA
is working on a new IT governance model.

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CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency
Department of Labor and Economic Opportunity
Finding 9 Agency Preliminary Response and Auditor's Comments to
Agency Preliminary Response
This section contains UIA's preliminary response to Finding 9 and our auditor's comments providing further
clarification and context where necessary.
Finding 9:

Improvements needed to ensure claimants are able and available for full-time work.

UIA provided us with the following response:

AGENCY PRELIMINARY RESPONSE
We agree that internal controls could be improved during
the pandemic. However, UIA disagrees that established
procedures were bypassed.
The pandemic presented real-time challenges for which
Unemployment Insurance Agencies nationwide were ill
prepared. At the start of the pandemic, the Michigan
Unemployment Insurance Agency (UIA) responded
quickly and with empathy to calls from both the
legislature and claimants to get payments out the door
and into the accounts of Michigan workers. The
Michigan UIA was not alone in the challenges it faced.
However, Michigan is uniquely equipped to respond and
rectify these issues and has already begun the process
of doing so.

AUDITOR'S COMMENTS TO
AGENCY PRELIMINARY RESPONSE
In the Finding we state UIA informed us it bypassed
established procedures requiring approvals from key UIA
personnel when developing the weekly certification criteria,
because of the urgency to make the forms available. This
statement was taken directly from UIA staff and we first
reported this in our November 2021 performance audit
report, and then again within Finding 3 in this audit. UIA
did not provide us with any documentation, during or after
our fieldwork, in which key UIA personnel approved the
weekly certification criteria.

As noted in response to audits issued earlier this year,
UIA has taken dramatic steps to build upon and improve
our internal controls. In prior audits the Michigan Office
of the Auditor General (OAG) received from the UI
director a firm commitment to adhere to documented
internal controls moving forward for all program areas.
The unwavering assurances offered in the UIA response
to the Personnel Management Processes Audit released
in March 2022 apply here as well.
UIA reinstated the ability and availability questions in the
weekly certification on May 30, 2021, in conjunction with
the reinstatement of the work search requirement, in line
with our belief that these were associated. The
unemployment rate fell below 8.5% in November 2020 so
seeking work should have been reinstated at that time
but was not until six months later in May 2021. The
primary reason for the delay in reinstating the seeking
work requirements—and with it the able and available
requirements—was the reallocation of Agency resources
to extend federal programs under the Continued
Assistance Act (CAA) so claimants could continue to
receive their unemployment benefits. Additionally, delays
in reinstating these requirements were due to the

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following: (1) technical changes were required to the
phone certification process in Michigan's Automated
Response Voice Interactive Network (MARVIN system)
to allow claimants to submit their work search by phone
and (2) the desire to provide claimants with sufficient
notice that the requirement they look for work each week
would be reinstated.
In May of this year, the Michigan Office of the Auditor
General (OAG) conducted an audit of the Michigan
Integrated Data Automated System (MiDAS) and
Michigan Web Account Manager (MIWAM) systems,
shedding light on the significant challenges presented by
the existing UIA database especially as it relates to
change controls. The agency is hampered by an inability
to implement changes quickly and efficiently to systems
and processes. It is for this very reason that the UIA
issued a Request for Proposals (RFP) to replace the
existing database. This change is necessary to ensure
that the UIA has the best technology solution available
when serving Michigan workers and businesses. On
November 15, 2022, the UIA announced it has chosen a
new contractor to design and install a modern,
innovative, user-focused unemployment insurance
computer system that prioritizes ease of access for
workers and employers while also streamlining jobless
claims processing. The new system will replace MiDAS,
first put into use nearly a decade ago under former Gov.
Rick Snyder.

The issues noted in this Finding in this report relate to UIA
decisions to waive federal requirements, the delay to
reinstate them, and the known and likely overpayments
these actions allowed to ineligible claimants. This portion
of UIA's response has no relevance to the issues reported
in the Finding. Further, our MiDAS report from May 2022
focused on UIA and DTMB's internal control related to
securing highly confidential federal tax information,
developing effective access controls, timely removal of
user access, adopting appropriate security benchmarks,
improving security awareness training, and improving
change controls. Our conclusions in the May 2022 report
did not establish MiDAS to be at fault, but rather identified
the need for improved human intervention in the form of
sufficient internal control and processes. UIA will need to
ensure it implements sufficient internal control in any
system UIA employs or similar deficiencies will continue to
exist.

The agency is committed to improving processes and
providing claimants the ability to certify that they are able
and available for work. Over the last 11 months the
agency has taken dramatic steps to improve and build
upon existing internal controls and will continue to do so.
As noted at the start of this response the UIA has
articulated in prior audits a firm commitment to building
upon and strengthening existing internal controls.
As noted above, UIA reinstated the ability and availability
questions in the weekly certification on May 30, 2021.
Significantly, the United States Department of Labor is
not requiring UIA to recertify individuals who were not
questioned regarding their ability and availability in their
weekly certifications for the time period indicated.
However, UIA has identified claimants with overpayments
for this reason and is waiving the overpayments based
on agency error as allowed by the Michigan Employment
Security (MES) Act.
UIA will improve its internal controls to ensure all
claimants certify that they are able and available for work
unless a waiver of the requirement applies. To ensure
that any such waiver is properly applied, UIA will review
each waiver type to ensure that the application of the
waiver only waives the specific requirement, i.e., able or
available, as established by law. The UIA closely
reviews the eligibility of certain claimant populations for
waivers.

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On July 21, 2022, the UIA announced it had applied
another round of waivers for more than 7,300 claims.
These waivers applied to individuals who had received
overpayment determinations related to ability and
availability for work. The agency published a release
announcing the application of these waivers. So far this
year the agency has issued three rounds of waivers. The
UIA has issued more than 76,000 waivers and waived
more than $555 million in overpayments for Michigan
workers. The other waiver populations include those
impacted by the Lost Wage Assistance (LWA) program
and confusion related to the reporting of gross v. net
income.

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CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency
Department of Labor and Economic Opportunity
Finding 10 Agency Preliminary Response and Auditor's Comments to
Agency Preliminary Response
This section contains UIA's preliminary response to Finding 10 and our auditor's comments providing further
clarification and context where necessary.
Finding 10: Improvements needed to calculate accurate weekly benefit amounts.
UIA provided us with the following response:

AGENCY PRELIMINARY RESPONSE

AUDITOR'S COMMENTS TO
AGENCY PRELIMINARY RESPONSE

We agree. The two years immediately preceding the
pandemic marked a season of great change at the UIA;
change that depleted the ranks of seasoned UIA staff
and with it a wealth of historical and demonstrated
program knowledge. The prior administration of Gov.
Rick Snyder, addressing widespread system failures,
closed out its term by replacing a once experienced team
with a new executive team principally compromised of
unemployment insurance novices. The new UIA team
was unfortunately still partnered with a vendor and
system with a troubled past in Michigan. On
November 15, 2022, the UIA announced it had chosen a
new vendor to design and install a modern, innovative,
user-focused unemployment insurance computer system
that prioritizes ease of access for workers and employers
while also streamlining jobless claims processing. The
new system will replace the Michigan Integrated Data
Automated System (MiDAS), first put into use nearly a
decade ago under former Gov. Snyder.
The global pandemic unleashed an economic hailstorm
like nothing we may ever again see in this lifetime. New
and shifting federal programs with constantly changing
guidelines assaulted the UI systems across the country.
As cited in the November 2020 Deloitte Report:

While we noted the evolving guidance from USDOL
through the issuance of numerous UIPLs, we also noted
early and consistent guidance to help states place the
requisite emphasis on program integrity while implementing
the new programs in an expeditious manner. We cite
these UIPLs many times within the Findings in this report.

On March 18, 2020, the President signed into law the
Families First Coronavirus Response Act ("FFCRA"). On
March 27, 2020, the Coronavirus Aid, Relief, and
Economic Security ("CARES") Act was signed into law,
which expanded states' ability to provide unemployment
insurance for workers impacted by the Pandemic.
Separate and apart from standard unemployment
insurance ("UI"), the CARES Act provided funding for
special Pandemic Unemployment Assistance ("PUA") for
a period of up to 39 weeks and associated Federal
Pandemic Unemployment Compensation ("FPUC"). In
Michigan, qualified UI and PUA applicants were eligible
for an additional $600 a week in FPUC for the weeks
between March 29, 2020 through July 25, 2020.

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Concurrent with the Pandemic, Michigan's
unemployment rate increased from approximately 3.6%
in February, 2020 to 24.0% in April, 2020. From
March 15, 2020 through October 23, 2020, UIA received
approximately 3.8 million claims filed for unemployment,
which exceeded the previous six years combined.
During the same period, UIA paid over $22.9 billion to
claimants, averaging over $716 million in payments a
week.
In the midst of all of the above, the Deloitte report notes
explicitly:
"it is understood that UIA was receiving pressure to
expedite payments from numerous directions within the
State, including lawmakers. For example, on June 4,
2020, a letter was sent to the Governor from 20 Michigan
state representatives that "[requested] the replacement of
the Unemployment Insurance Agency leadership team"
as there "[needed] to be some accountability for the
department and [they needed] to get… benefits to the
people of Michigan." Specifically, the letter noted, "When
the [Pandemic] first started the legislature was told cases
would have a response within four to seven days, then it
was moved to ten business days and finally to three to
four weeks. This is unacceptable."
It is with this context that the UIA makes clear its
commitment to ensure it determines claimants' WBA
timely, accurately, and in accordance with applicable
laws. However, what the OAG fails to acknowledge is
that prior to the pandemic and these federal programs,
the UIA had no obligation for employment verification and
once the federal programs ended, the obligation to verify
also ended.
Specifically, to the elements of this finding:
a.

Moving forward, UIA will be more vigilant in new
program development to ensure program
eligibility and processes are clearly defined and
align with statute and U.S. Department of Labor
guidance. Also, the affected divisions will be
consulted and will approve changes prior to
implementation. UI will also practice effective
internal controls and ensure approvals are
documented moving forward.

Due to the historic number of unemployment
applications filed during the pandemic, the
workload exceeded UIA's ability to timely
process work. UIA completed the backlog of
PUA income verification work items by January
2022.

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It is not accurate for UIA to indicate it had no obligation for
employment verification prior to the pandemic and ended
this once the federal programs ended. We note in the
Finding that income verification was a unique requirement
applicable to PUA claims. However, UIA has and will
continue to have an obligation to establish proper internal
control to establish a correct WBA on all UI claims. For
regular UI claims (prior to, during, and after the pandemic)
both employment and income requirements exist. UIA
verifies both based upon reported employer quarterly
wages within MiDAS and monetary determinations sent to
the prospective claimant's previous employers. These
monetary determinations include the claimant's WBA and
number of weeks the claimant is monetarily eligible.

104

CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency
Department of Labor and Economic Opportunity
Finding 13 Agency Preliminary Response and Auditor's Comments to
Agency Preliminary Response
This section contains UIA's preliminary response to Finding 13 and our auditor's comments providing further
clarification and context where necessary.
Finding 13: Improvements needed to UIA's responsiveness to claimant communications.
UIA provided us with the following response:

AGENCY PRELIMINARY RESPONSE

AUDITOR'S COMMENTS TO
AGENCY PRELIMINARY RESPONSE

We agree the UIA should improve its responsiveness to
claimant contact and the clarity of claimant
communications.
Throughout the pandemic, the UIA was acting swiftly and
with empathy to address hardships that people were
going through due to a global pandemic. The volume of
claims filed in the spring of 2020 peaked with a high of
over 388,000 in a single week, compared with just 5,000
claims before the pandemic and a weekly high of 77,000
claims during the Great Recession. Since March 15,
2020, over $40 billion in benefits has been paid to over
3.5 million workers. The UIA has increased capacity,
improved workflow and other internal systems, and
reduced red tape to meet the unprecedented level of
claims that have been filed since the pandemic began.
At the height of the pandemic, customer-facing staff more
than quadrupled. Before the pandemic, the UIA had
around 650 staff; at its peak, nearly 3,000 UIA team
members were helping claimants. During the period of
March and April 2020 that saw the most dramatic change
in call volume, in terms of unique contacts our peak was
April 27, 2020, when 193,717 individuals attempted to
contact UIA versus our trough of 1,962 on March 6, 2020.
Prior to the pandemic, UIA typically had 65 staff assigned
to incoming calls and chats. The remaining staff were
performing other customer-service related work. If UIA
had 65 staff handling 1,962 contacts on March 6 and our
completion rate was 75%, We would have needed 81
staff to complete 100% of contacts on that day. UIA
would have needed 100 times the staff, or 8,100, at the
height of the pandemic to maintain that 100% completion
rate. A fact the OAG knows too well as it went to great
lengths to document in the Personnel Management Audit
released earlier this year.
Specifically, related to finding subparts a.-d.:
a.

Projecting staffing needs was not within the scope of this
audit or the March 2022 performance audit, Personnel
Management Processes During the COVID-19 Pandemic,
UIA references in its response. We made no such
assertions in either audit.

UIA agrees that it did not track the number of
calls into the Contact Center that received busy

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signals. Since a call receiving a busy signal
never reaches our InContact platform, there was
no ability to track that data. UIA will work with its
DTMB partners to determine whether a solution
can be created that would allow the agency to
track that data in the future.
b.

UIA agrees that its claimant chat response rate
was uneven during the pandemic. UIA is
working to develop an appropriate staffing plan
to address that situation, so the agency is
prepared for another high-volume event. The
UIA has created a daily dashboard shared with
the Benefits Divisions managers and
administrators as well as the UIA director. This
dashboard provides timely data and insight
about the total number of daily contacts
(including chats) coming in and the response
rate. This real-time data allows the agency to
adjust our staffing assignments on a daily basis.

UIA agrees that its claimant web notice response
rate was uneven during the pandemic. UIA is
working to develop an appropriate staffing plan
to address that concern, so the agency is
prepared for another high-volume event. In the
meantime, the agency is running regular queries
of the types of web notices being submitted with
special attention on those with protests and
appeals with collections and restitution attached.

UIA agrees that communications to claimants
were sometimes confusing. UIA is working with
its a Detroit nonprofit partner to improve the
most common claimant letters using plain
language and giving clear next steps; create a
clear digital roadmap to guide claimants through
the unemployment eligibility, application,
determination, and certification processes; and
update the claimant portal to be more userfriendly. UIA held the project implementation
phase kickoff on August 3, 2022, and expects
improvements to be implemented by the end of
2023.

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CLAIMS PROCESSING DURING THE COVID-19 PANDEMIC
Unemployment Insurance Agency
Department of Labor and Economic Opportunity
Finding 14 Agency Preliminary Response and Auditor's Comments to
Agency Preliminary Response
This section contains UIA's preliminary response to Finding 14 and our auditor's comments providing further
clarification and context where necessary.
Finding 14: UIA needs to ensure the completion of call center staff monitoring.
UIA provided us with the following response:

AGENCY PRELIMINARY RESPONSE
We agree and have taken corrective action. UIA agrees
that everyone contacting the Agency should expect and
receive a high level of customer service. However, it is
disingenuous of the OAG to suggest that the UIA was not
committed to managing or monitoring calls in the midst of
the pandemic. Despite facing extraordinary challenges
during the pandemic, UIA remained committed to
managing and monitoring contacts to ensure optimal
quality and volume under the circumstances. On
Monday, August 15, 2022, the UIA announced to staff
that it would cease to utilize both Robert Half and
Accenture contract staff effective Friday, September 30,
2022. For more than two years the work of the UIA has
been supported by the invaluable efforts of our LimitedTerm (LT) staff. Our LT employees are an integral part of
the Agency's post-pandemic recovery and we have been
working diligently to extend that partnership. In closing
the contract with Robert Half and Accenture we were
able to extend the term for those Limited-Term staff
supporting our Benefits Operations and Benefits
Customer Service Divisions through the first of February
2023. The Limited-Term staff supporting our two
Benefits Divisions have transitioned to processing
adjudication and other work items for customers who
contact the agency by phone or chat or make a phone or
virtual appointment.

AUDITOR'S COMMENTS TO
AGENCY PRELIMINARY RESPONSE

UIA's response contains extraneous information not
relevant to the Finding. Also, the statement that the OAG
is disingenuous does not reconcile with the fact that UIA
agreed with the Finding and apparently has taken
corrective action. We make no assertions or inferences in
the Finding or elsewhere in this report which speculate
about UIA's level of commitment to managing or monitoring
calls during the pandemic.

Over 70 percent of customer contacts are due to pending
work items. This shift allows us to respond in real time to
claimant needs whether that means answering questions,
making determinations, or processing work items. Since
this transition, UIA has witnessed an extraordinary
increase in customer satisfaction ratings based on our
customer surveys. In the six months preceding the
departure of the contract staff, the customer service
positive rate was at 76%. Since the UIA's move on
October 3 to have all limited term UIA staff answer calls,
our positive rating is now at 90% (through November 11,
2022).
In the weeks prior to the pandemic up until the week
ending March 13, 2020, the UIA call volume had been
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"normal". Meaning 4,950 people attempted to reach us
on a Monday and that number gradually reduced during
the week to 2,129 individuals attempting to contact us on
Friday. Our contact completion rate at that time was
72%-78% with 81 staff.
For the following week ending March 20, 2020, we saw
the first indications of the impact of the pandemic on call
volume. The numbers below are for unique incoming
contacts:
March 16, 2020 - 14,720
March 17, 2020 - 25,680
March 18, 2020 - 28,466
March 19, 2020 - 29,951
March 20, 2020 - 34,708
The chart below depicts call volume from March 16,
2020, through April 30, 2020. March 23, 2020, marked an
"overnight" jump from 34,000 incoming unique contacts
on Friday to 129,000 unique incoming contacts on
Monday. During the March and April 2020 period that
saw the most dramatic change in call volume, our peak in
terms of unique contacts was April 27, 2020, where
193,717 individuals attempted to contact UIA versus our
trough of 1,962 on March 6, 2020.
Prior to the pandemic, UIA typically had 65 staff assigned
to incoming calls and chats. The remaining staff were
performing other customer-service related work. If UIA
had 65 staff handling 1,962 contacts on March 6 and our
completion rate was 75%, we would have needed 81
staff to complete 100% of contacts on that day. UIA
would have needed 100 times the staff, or 8,100, at the
height of the pandemic to maintain that 100% completion
rate.
States across the country felt the crushing weight of this
increased call volume. Michigan was not the only one to
struggle. The OAG's focus in this finding on a "failure to
adequately monitor" contract staff by the UIA is neither
rooted in nor reflective of the reality and totality of the
circumstances in which the agency found itself.
The Agency is committed to effectively monitoring the
quality of work of all call center employees and has since
established procedures to address the OAG's concerns.

UIA is apparently attempting to attribute a quote to our
Office that does not appear in this Finding or elsewhere in
this report. Our conclusions and recommendation in the
Finding are rooted in the facts as presented. UIA has
provided no proof to refute the assertions we make and
apparently agree with our assertions, because in its own
words, UIA agreed and took corrective action.

Since October 2021, there has been significant change to
the structure and makeup of the UIA Executive Team.
Specifically, we:
•

Created and filled a new Administrator of
Customer Service uniquely equipped to lead our
local offices and call center staff in such a way
that allows us to better serve our diverse
clientele.

•

Changed the executive level reporting structure
so that now each Division Administrator reports
directly to the UIA director; thus allowing the UIA

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director to personally communicate to her team
the expectations for and commitment to
customer service.
The staff and leadership have also been charged with
identifying opportunities for change that will both position
and equip the Agency to better meet the needs of
claimants and employers at every point of their journey
with UIA.
Further, UIA currently requires each contract staff
manager and State of Michigan manager of an LT
Customer Service team to complete one call or chat
review per team member per week. The manager logs
the specific review, the result, and any required follow up,
including corrective action. These reports are made
available to UIA management upon demand.
UIA also currently requires each contract staff manager
and SOM manager of an LT phone team to review the
customer service surveys that were completed and
assigned to their staff member for the previous week.
These customer service surveys provide customer
feedback on individual staff members. While managers
can review surveys with positive ratings, we ask that they
focus on surveys with negative reviews of the first three
questions of the survey that are specific to agent
behavior:
•
•
•

Was the representative professional and
courteous?
Was the representative knowledgeable?
Was the information given easy to follow and
understand?

We have asked that managers follow up with feedback
both in team huddles and with individual staff members
that reflects specific customer service survey feedback
items.

UIA provided this chart with its response to this Finding. It
was not subject to our audit procedures. Therefore, we
have no comment or conclusion related to it.

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AGENCY DESCRIPTION
The federal Social Security Act of 1935 created the UC program
as a joint federal-state partnership, with each state responsible for
designing its own program within broad federal guidelines. In
response to this Act, UIA was originally created as the Michigan
Employment Security Commission by the Michigan Employment
Security Act of 1936, being Sections 421.1 - 421.75 of the
Michigan Compiled Laws. Under EO 2014-12, UIA was
transferred from the Department of Licensing and Regulatory
Affairs to the Talent Investment Agency, Department of Talent
and Economic Development. Under EO 2019-13, the Department
of Talent and Economic Development was renamed the
Department of Labor and Economic Opportunity.
UIA operates Michigan's UI program, which collects
unemployment taxes from employers and provides temporary
income for workers who are unemployed through no fault of their
own. UIA's mission* is to lighten the burden of involuntary
unemployment on the worker and their family. UIA strives to
provide timely benefits to every eligible unemployed worker. To
slow the spread of COVID-19 after the first confirmed cases in
Michigan in March 2020, the Governor declared a state of
emergency and issued a series of EOs placing restrictions on
public gatherings. These orders temporarily closed schools,
businesses, and other employers resulting in the largest spike in
unemployment in Michigan history.
According to data on UIA's public Web site, from March 15, 2020
through June 30, 2022, UIA received 5.8 million claims from 3.5
million unique claimants and paid $39.9 billion to 2.45 million
claimants as shown below:

Claim Type
Regular UI
PUA
Extensions
Work Share
Others

Claims
Created
(In Millions)

Claimant Type

Claimants
(In Millions)

2.6
1.9
1.1
0.2
0.0

Unique claimants
Ineligible / denied / not certifying claimants
Potentially eligible, certifying claimants
Paid claimants
Unpaid claimants

3.5
1.0
2.5
2.5
0.0

Category
PUC
Regular UI
PUA
PEUC
LWA
EB
Work Share
Other

Paid Out
(In Billions)
$22.0
$ 6.3
$ 6.1
$ 2.9
$ 1.7
$ 0.4
$ 0.1
$ 0.4

* See glossary at end of report for definition.
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AUDIT SCOPE, METHODOLOGY, AND OTHER INFORMATION
AUDIT SCOPE

To examine UIA's efforts to process UI claims in accordance with
selected State and federal requirements during the COVID-19
pandemic and effectively communicate with claimants. We
conducted this performance audit* in accordance with generally
accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We
believe that the evidence obtained provides a reasonable basis
for our findings and conclusions based on our audit objectives.
Generally accepted government auditing standards require us to
report significant constraints imposed upon the audit
approach. We could not assess the appropriateness of 55,000
overpayment waivers noted in Finding 4 because UIA would not
provide us with the information related to them.
As part of the audit, we considered the five components of internal
control (control environment, risk assessment, control activities,
information and communication, and monitoring activities) relative
to the audit objectives and determined all components were
significant.

PERIOD

Our audit procedures, which included a preliminary survey, audit
fieldwork, report preparation, analysis of agency responses, and
quality assurance, generally covered January 1, 2020 through
June 30, 2022.

METHODOLOGY

We conducted a preliminary survey to gain an understanding of
UIA's processes and controls related to the regular UI, EB, PEUC,
PUA, PUC, and other UC programs. During our preliminary
survey, we:
•

Reviewed the MES Act and Michigan Administrative Code
rules related to UC programs.

•

Reviewed EOs issued during the COVID-19 pandemic
related to UC programs.

•

Reviewed unemployment provisions of the CARES Act.

•

Reviewed CAA and ARPA related to changes for
unemployment programs.

•

Reviewed applicable USDOL guidance in various UIPLs.

* See glossary at end of report for definition.
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OBJECTIVE 1

•

Reviewed UIA Manual sections related to claims
processing.

•

Reviewed UIA's Handbook for Unemployed Workers.

•

Reviewed UIA's guidance to its staff during the COVID19 pandemic.

•

Interviewed UIA senior staff and executive leadership.

•

Met with UIA staff regarding various business
processes.

•

Met with UIA consulting contractors.

•

Reviewed USDOL OIG's May 2021 report entitled
COVID-19: States Struggled to Implement CARES ACT
UI Programs.

•

Reviewed Deloitte's November 2020 Chronology of Key
Fraud Risk Management Events report.

•

Reviewed USDOL's February 2021 enhanced desk
monitoring review (EDMR) report of UIA's
administration of the PUA program and UIA's responses
to findings from that report.

To assess the effectiveness of UIA's efforts to process UI
claims in accordance with selected State and federal
requirements during the COVID-19 pandemic.
To accomplish this objective, we:
•

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Evaluated UIA's processing of unemployment claims for
selected attributes by randomly selecting and reviewing:
o

60 of 1,035,147 PUA claims receiving UC for
any benefit weeks from April 2020 to October
2021.

40 of 478,471 PUA claims submitted from April
2020 through October 2021 with no related
benefit payments.

60 of 2,519,933 regular UI, EB, and PEUC
claims and 40 of 187,354 Work Share claims
filed or active at any time from January 1, 2020
through September 30, 2021 and received UC
for any benefit weeks.

40 of 1,003,171 regular UI, EB, and PEUC
claims and 40 of 26,188 Work Share claims filed
or active from January 1, 2020 through
112

September 30, 2021 that were not paid any
unemployment benefits.

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•

Obtained an understanding of UIA's fact-finding process
related to overpayments and intentional
misrepresentation.

•

Analyzed data for PUA claims for which UIA had
established intentional misrepresentation.

•

Analyzed data from PUA applications and weekly
certifications submitted from April 2020 through October
2021 to identify claimants receiving payment who did
not select a valid COVID-19 reason and for other
indicators of potential intentional misrepresentation or
fraud. We also randomly selected and reviewed 25 of
134,779 PUA weekly certifications in which the claimant
had been paid but certified they did not meet any of the
14 federal eligibility criteria or UIA's 5 invalid eligibility
criteria and 30 of the 54,887 PUA weekly certifications
in which the claimant had been paid but certified they
were eligible for PUA benefits for a reason other than
the 14 federal eligibility criteria.

•

Reviewed e-mails and interviewed UIA staff regarding
UIA's decision to temporarily suspend its fraud controls
at the onset of the COVID-19 pandemic.

•

Assessed the appropriateness of UIA's benefit
certification forms used in the regular UI, EB, and
PEUC programs from January 2020 through December
2021. In addition, we assessed the impact of UIA's May
2021 form changes on its weekly benefit payment
amounts and the nonmonetary issues created for UI,
EB, and PEUC claims.

•

Reviewed UIA's PUA requalification and recertification
process to determine if UIA required all applicable
claimants to requalify and/or recertify, as appropriate.

•

Met with UIA personnel and reviewed State and federal
laws and guidance to obtain an understanding of the
overpayment waiver process.

•

Reviewed e-mails and reports UIA sent to USDOL
related to overpayments and overpayment waivers.

•

Analyzed overpayments and overpayment waivers
established between March 1, 2020 and December 14,
2021 and randomly selected and reviewed the
appropriateness of 60 of the 331,751 overpayment
waivers.

113

•

Evaluated the sufficiency of UIA's internal guidance for
ensuring it adjudicated PUA EV cases in accordance
with CAA requirements.

•

Assessed UIA's actions upon learning approximately
314,000 PUA claimants had no recent attachment to
the workforce, as of November 2, 2020. Also, we
randomly selected and reviewed UIA's adjudication of
PUA EV cases for 50 of these claimants.

•

Identified the multiple iterations of PUA applications UIA
created and used during the COVID-19 pandemic and
reviewed MiDAS to assess the authenticity of the PUA
applications maintained for the same 60 randomly
selected paid PUA claims identified in the first bullet of
our methodology for Objective 1.

•

Evaluated the effectiveness of UIA's BPR process at
ensuring scheduled benefit payments were proper
before releasing them. In addition, we reviewed claim
documentation in MiDAS for the 5 largest scheduled
payments and 5 randomly selected scheduled
payments from 24,082 BPRs approved during the week
ended June 19, 2020 to assess the effectiveness of
completed BPRs. We also reviewed claim
documentation for the 5 highest benefit payments made
without a BPR between January 1, 2020 and December
31, 2021, for benefit weeks between January 1, 2020
and September 30, 2021, to assess the
appropriateness of those benefit payments.

•

Assessed UIA's federally required quarterly wage and
new hire crossmatch processes and randomly selected
and reviewed 25 of the 59,404 wage crossmatch
nonmonetary issues UIA created in March 2022 to
assess its follow-up efforts on matched claims.

•

Analyzed data for PUA income verification cases and
randomly selected and reviewed 25 of 353,479 PUA
income verification cases established as of December
31, 2021 to determine whether UIA reviewed and
appropriately processed the supporting income
documentation.

•

Compared UIA's claim processing timeliness against
USDOL-ETA UI Performs core measures.

•

Reviewed Deloitte's December 2021 Fraud
Measurement Estimation report.

We selected our random samples to eliminate any bias and
enable us to project our test results to their respective
populations. For our judgmental samples, we selected high
risk sample items for efficiency* purposes, and therefore, we
could not project the results to the respective populations.
* See glossary at end of report for definition.
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OBJECTIVE 2

To assess the effectiveness of UIA's communications with UI
claimants during the COVID-19 pandemic.
To accomplish this objective, we:
•

Interviewed UIA and DTMB staff to gain an
understanding of call center operations and staff
monitoring activities and resources.

•

Evaluated the timing, clarity, and accuracy of UIA's
written claimant communications by reviewing the
written communication for the same randomly selected
UI, EB, and PEUC, and PUA claims identified in the first
bullet of our methodology for Objective 1.

•

Met with UIA staff and reviewed UIA's staffing contracts
to identify the responsible parties and processes for
monitoring the performance of call center workers. We
randomly selected weeks ended from January 4, 2020
through October 2, 2021, in which UIA or its contractors
had call center worker monitoring processes in place.
We then randomly selected 8 of 75 applicable weeks for
Accenture staff, 5 of 45 applicable weeks for Robert
Half staff and 9 of 92 applicable weeks for UIA staff.
Next, we randomly sampled a total of 109 staff for the
selected weeks and reviewed the workers' performance
reviews for the 69 applicable call center workers. We
also listened to or reviewed 36 of the related calls or
chats to assess the appropriateness of the completed
monitoring activity.

•

Assessed the service quality for 15 calls and 20 chats
randomly selected from 496,033 calls and chats
handled in randomly selected weeks from February,
May, July, and August 2021.

•

Reviewed aggregate call and chat data for January
2020 through September 2021.

•

Assessed UIA's addition of telephone ports in response
to increased call volume for January 2020 through
September 2021.

•

Evaluated the requalification and recertification letters
sent to PUA claimants for clarity and accuracy.

We selected our random samples to eliminate any bias and
enable us to project our test results to their respective
populations.

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OBJECTIVE 3

To compile and provide information on UI claims processed by
UIA during the COVID-19 pandemic and other relevant data.
To accomplish this objective, we obtained and reported as
supplemental information:

CONCLUSIONS

•

UI claims data from USDOL and UIA.

•

UI overpayments data from USDOL and UIA.

•

Call center data from UIA.

•

Employment data from the U.S. Bureau of Labor
Statistics.

We base our conclusions on our audit efforts and any resulting
material conditions or reportable conditions.
When selecting activities or programs for audit, we direct our
efforts based on risk and opportunities to improve State
government operations. Consequently, we prepare our
performance audit reports on an exception basis.

AGENCY
RESPONSES

Our audit report contains 14 findings and 15 corresponding
recommendations. UIA's preliminary response indicated UIA
and LEO agree or partially agree with all of the
recommendations. However, UIA's preliminary response does
not specifically address the second recommendation in
Finding 4.
The agency preliminary response following each
recommendation in our report was taken from the agency's
written comments and oral discussion at the end of our
fieldwork. Section 18.1462 of the Michigan Compiled Laws
and the State of Michigan Financial Management Guide (Part
VII, Chapter 4, Section 100) require an audited agency to
develop a plan to comply with the recommendations and to
submit it to the State Budget Office upon completion of an
audit. Within 30 days of receipt, the Office of Internal Audit
Services, State Budget Office, is required to review the plan
and either accept the plan as final or contact the agency to take
additional steps to finalize the plan.

PRIOR AUDIT
FOLLOW-UP

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Following is the status of the reported findings from our
February 2016 performance audit of the Michigan Integrated
Data Automated System (MiDAS), Unemployment Insurance
Agency, Department of Talent and Economic Development
(641-0593-15); our April 2016 performance audit of Claimant
Services, Unemployment Insurance Agency, Department of

116

Talent and Economic Development (641-0318-14); and our
February 2020 follow-up report on prior audit recommendations
(641-0318-14F):
Prior Audit
Project
Number

Prior Audit
Finding
Number

641-0593-15

Topic Area

Current
Status

Current
Finding
Number

UIA had not fully
implemented a
comprehensive MiDAS
security management
program.

Not in scope of this audit.

DTMB did not fully
establish effective
security and access
controls on MiDAS
servers.

Not in scope of this audit.

641-0593-15

UIA did not implement
effective MiDAS access
controls.

Not in scope of this audit.

641-0593-15

UIA and DTMB did not
maintain effective
security and access
controls over the MiDAS
database.

Not in scope of this audit.

641-0593-15

UIA did not implement
automated controls
within MiDAS to detect
claimants who had not
submitted evidence of
their work search efforts.

Complied

Not applicable

UIA and DTMB did not
fully analyze and review
MiDAS data to help
identify UI benefit
payments needing
further review.

Not in scope of this audit.

641-0593-15

UIA had not fully
implemented processing
controls within MiDAS.

641-0593-15

UIA did not fully review
and implement methods
to further automate
MiDAS claim
processing.

Rewritten*

Observation 2

* See glossary at end of report for definition.
Table continued next page
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Prior Audit
Project
Number

Prior Audit
Finding
Number

641-0318-14

641-0318-14F

Topic Area

Current
Status

Current
Finding
Number

Improvements are
needed to process
claimant and employer
mail returned
undeliverable and
without a forwarding
address.

Not in scope of this audit.

Improvements are
needed to ensure
employers posted
notices informing
workers they were
covered for UI benefits.

Not in scope of this audit.

UIA should seek
feedback from claimants
to evaluate their
satisfaction with UIA.

Complied

Not applicable

Continued
enhancements are
needed for
communicating with
current and prospective
UI claimants.

Rewritten

Finding 13

Improvements are
needed to consistently
meet federal
performance standards.

Repeated*

Finding 12

Evaluation of the Worker
Profiling and
Reemployment Services
system is needed.

Not in scope of this audit.

Improvements are
needed to ensure
claimants are referred to
reemployment services.

Not in scope of this audit.

Note: The status of one material condition (Finding 1) and four of the reportable conditions
(Findings 2, 6, 7, and 8) and the eight corresponding recommendations from our
April 2016 performance audit of Claimant Services (641-0318-14) was initially
followed up and reported in our February 2020 follow-up report on prior audit
recommendations (641-0318-14F).
SUPPLEMENTAL
INFORMATION

Our audit report includes supplemental information presented as
Exhibits 1 through 11. Our audit was not directed toward
expressing a conclusion on this information.

* See glossary at end of report for definition.
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GLOSSARY OF ABBREVIATIONS AND TERMS
ARPA

American Rescue Plan Act.

auditor's comments to
agency preliminary
response

Comments the OAG includes in an audit report to comply with
Government Auditing Standards. Auditors are required to evaluate
the validity of the audited entity's response when it is inconsistent
or in conflict with the findings, conclusions, or recommendations. If
the auditors disagree with the response, they should explain in the
report their reasons for disagreement.

BPR

benefit payment review.

CAA

Consolidated Appropriations Act.

CARES

Coronavirus Aid, Relief, and Economic Security.

Code of Federal
Regulations (CFR)

The codification of the general and permanent rules published by
the departments and agencies of the federal government.

COVID-19

The disease caused by a new coronavirus called SARS-CoV-2.
The World Health Organization first learned of the new virus in
December 2019.

DTMB

Department of Technology, Management, and Budget.

extended benefits.

EDMR

enhanced desk monitoring review.

effectiveness

Success in achieving mission and goals.

efficiency

Achieving the most outputs and the most outcomes practical with
the minimum amount of resources.

executive order.

ETA

Employment Training Administration.

employment verification.

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FEMA

Federal Emergency Management Agency.

Investigations Division.

imposter fraud

Claims often filed by criminals from other states or overseas who
use stolen identities to file multiple false claims.

intentional
misrepresentation

An act of willful misrepresentation or nondisclosure of a material
fact for the purpose of obtaining benefits to which the claimant is
not entitled or preventing benefit payments where an individual is
entitled.

internal control

The plan, policies, methods, and procedures adopted by
management to meet its mission, goals, and objectives. Internal
control includes the processes for planning, organizing, directing,
and controlling program operations. It also includes the systems
for measuring, reporting, and monitoring program performance.
Internal control serves as a defense in safeguarding assets and in
preventing and detecting errors; fraud; violations of laws,
regulations, and provisions of contracts and grant agreements; or
abuse.

Internet Protocol.

LEO

Department of Labor and Economic Opportunity.

LWA

Lost Wages Assistance.

material condition

A matter that, in the auditor's judgment, is more severe than a
reportable condition and could impair the ability of management to
operate a program in an effective and efficient manner and/or
could adversely affect the judgment of an interested person
concerning the effectiveness and efficiency of the program. Our
assessment of materiality is in relation to the respective audit
objective.

MES

Michigan Employment Security.

Michigan Integrated Data
Automated System
(MiDAS)

UIA's computer system used for processing and servicing all UI tax
and benefit functions.

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Michigan Web Account
Manager (MiWAM)

UIA's computer system used by UI claimants and employers for
filing and claim management.

Michigan Works! Agencies
(MWAs)

The 16 regional agencies engaged in a Statewide network to
provide workforce development services. The agencies are
affiliated with local governments, private agencies, and nonprofit
agencies. Employees of the various agencies are not State
employees.

mission

The main purpose of a program or an entity or the reason the
program or the entity was established.

observation

A commentary highlighting certain details or events that may be of
interest to users of the report. An observation may not include all
of the attributes (condition, effect, criteria, cause, and
recommendation) presented in an audit finding.

OIG

Office of Inspector General.

Pandemic Unemployment
Compensation (PUC)

Officially named Federal Pandemic Unemployment Compensation,
which provided additional benefits up to $600 each week a
claimant was eligible for other unemployment programs.

performance audit

An audit that provides findings or conclusions based on an
evaluation of sufficient, appropriate evidence against criteria.
Performance audits provide objective analysis to assist
management and those charged with governance and oversight in
using the information to improve program performance and
operations, reduce costs, facilitate decision-making by parties with
responsibility to oversee or initiate corrective action, and contribute
to public accountability.

PEUC

Pandemic Emergency Unemployment Compensation.

PUA

Pandemic Unemployment Assistance.

redetermination

A written statement issued on a form or letter by an authorized
agent of the Agency, which affirms, modifies, or reverses a prior
determination or redetermination.

repeated

The wording of the current recommendation remains essentially
the same as the prior audit recommendation.

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reportable condition

A matter that, in the auditor's judgment, is less severe than a
material condition and falls within any of the following
categories: a deficiency in internal control; noncompliance with
provisions of laws, regulations, contracts, or grant agreements;
opportunities to improve programs and operations; or fraud.

rewritten

The recurrence of similar conditions reported in a prior audit in
combination with current conditions that warrant the prior audit
recommendation to be revised for the circumstances.

SOC

standard occupational classification.

unemployment compensation.

unemployment insurance.

UIA

Unemployment Insurance Agency.

UIPL

Unemployment Insurance Program Letter.

USDOL

U.S. Department of Labor.

USDOL ETA

U.S. Department of Labor Employment and Training
Administration.

USPS

United States Postal Service.

WBA

weekly benefit amount.

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Online: audgen.michigan.gov/report-fraud
Hotline: (517) 334-8070

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