The individuals involved in the suit said they relied on the agency’s determination that they were eligible for jobless aid, but now are facing overpayment assessments.
The class includes residents who were issued overpayment notices more than a year after the agency deemed them eligible for aid, those who were paid as a result of an agency error and those whom the agency is starting to collect from without making a final determination on their case.
“... a redetermination and overpayment notice received a year after unemployment benefits were paid is a recipe for financial ruin,” according to the lawsuit.
The suit is similar to an ongoing lawsuit currently at the Michigan Supreme Court that alleges due process violations of thousands of individuals who were falsely accused of fraud between 2013 and 2015 by the Unemployment Insurance Agency.
The class-action suit filed Friday argues the state must issue redeterminations within a year of initially determining the person was eligible. The filing also argues the agency has a clear legal duty to issue overpayment waivers if the forced repayment “would be contrary to equity and good conscience.”
The suit asks the court to certify the plaintiffs as a class action group, issue an injunction on collections while the lawsuit is pending and, ultimately, find the collections activities void and contrary to law. The suit also seeks reimbursements for lost unemployment payments or deductions plus the creation of a “common fund” to compensate unemployment claimants harmed by the agency’s actions.
“There is a clear public interest in the right to receive benefits and to be free from unlawful garnishment and seizure, especially given the ongoing COVID-19 pandemic,” the lawsuit said.
The Unemployment Insurance Agency said it was reviewing the lawsuit.
Those wishing to join the suit, filed by lawyer David Blanchard, should visit the webpage for the litigation at https://bit.ly/3ubOHuo.
Plaintiffs listed in the complaint do not appear to include those caught up in an eligibility snafu that resulted because of an agency error. The mistake led to roughly 648,000 notices mailed to unemployment recipients who had to recertify their eligibility or pay back what they’d already received.
Instead, plaintiffs appear to include potentially thousands of others whom the agency considered eligible at one time for the new federal pandemic benefits only to retract those determinations and demand repayment months later.
Among those listed on the suit are Kellie Saunders, a Michigan wedding photographer who in October was told she owed more than $14,000 to the state because of an error it made while determining her weekly payment amount in April 2020.
Hospitality worker Erik Varga also is listed in the suit. The unemployment agency told him in January 2021 that he owed $17,000 after it deemed him ineligible.
He began protesting the amount but, while his protest was pending, the agency in April 2021 garnished his federal tax return and in August 2021 told Varga the state would garnish up to 25% of his earned income. Varga still has not gotten a final determination from the agency.
Lisa Shepard got a suspected case of COVID in March 2020, sidelining her from her job for months. In May 2020, the agency indicated Shepard was eligible for benefits and paid her through June and July.
The agency determined Shepard was ineligible in August 2020 and owed $4,420 to the agency and found her ineligible again in September 2020 and said she owed $3,311. She appealed both. An administrative law judge later ruled in Shepard’s favor in relation to the August 2020 fund, but her September protest went unheard and the agency continued to collect against her, including income tax refund garnishments.
Dawn Davis was a para-pro sub at Pinckney Schools when she was laid off at the start of the pandemic because of COVID-19 closures.
She was found to be eligible for jobless aid benefits in April 2020, with some backdated pay going to March 2020.
In January 2021, the agency stopped paying Davis and then told her was still eligible. In June 2021, the agency told Davis it had overpaid her in a series of two notices, one indicating the overpayment amounted to $18,648 and another purporting the amount was $1,840.
Her protest still is pending but she “reasonably worries and expects that her 2021 income tax refund, and future wages, will be garnished by the agency,” the suit said.
Another plaintiff, hospital administration worker Jennifer Larke, alleged she was laid off in April 2020 because of the pandemic and was determined eligible for unemployment. But in October 2020 she was determined ineligible and ordered to pay back $3,126.
Larke protested, but while her case was still pending in May 2021, the agency sent her notice that it would start garnishing up to 25% of her income until the overpayment was satisfied. The agency also seized part of Larke’s 2021 unemployment benefits to satisfy the 2020 debt.
Many of the plaintiffs, the lawsuit said, “have been subject to tax garnishment, wage garnishment, or other collection activity or have been required to repay alleged overpayments before any final determination was issued, and there before they became collectible under state and federal law.”
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