UIA Fraud Case – UPDATE

Posted September 16th, 2015

October 6, 2015 Meeting

The October 6th Meeting at the Baronette Renaissance Hotel in Novi was well attended. Individuals who have experienced unjustified overpayment and penalty assessments by the UIA or who have experienced garnishments and tax refunds intercepts described their situations to those in attendance and were able to secure advise from the team of attorneys assembled to assist those who requested help.  This meeting was helpful and additional meetings will be scheduled as the case progresses.  Watch this website for Notice of Meetings.

Neal A. Young Joins Legal Team

Former Michigan Compensation Appellate Commissioner Neal A. Young has joined the legal team suing the state’s Unemployment Insurance Agency (UIA).  Young, who served on the Commission for over 20 years, will be working with attorneys from Royal Oak law firm Pitt McGehee Palmer & Rivers which brought the lawsuit against the state on behalf of Michigan workers.

The complaint, filed last month in Michigan Court of Claims, alleges the UIA’s automated processing system erroneously flagged large numbers of worker claims as fraudulent or improper and then illegally seized millions of dollars in tax refunds owed to them.

“As a commissioner, I fought the type of UIA abuse detailed in this lawsuit on a case- by-case basis. Now that I’m in a better position to help, I look forward to working with the lawyers from Pitt McGehee Palmer & Rivers to end the agency’s unconstitutional practices and illegal tax refund seizures once and for all,” said Young.

In his work as a compensation appellate commissioner, Young reviewed thousands of unemployment benefits appeals filed by Michigan workers and employers. During his tenure as a commissioner, Young had often objected to determinations of worker claims being made entirely by UIA computers.

UIA Files Motion to Dismiss Case

On October 5, 2015, UIA filed a motion to dismiss the case with the Court of Claims.  We have posted the UIA motion to dsmiss for your review.

The motion seeks dismissal for 4 reasons:  The UIA argues that Bauserman failed to file his claim within 6 months of the interception of his tax refund.  Bauserman did, in fact, file his claim with the Court of Claims within 6 months of the UIA seizing his tax refunds.  The UIA is unlikely to win this argument.

Next the UIA argues that it has refunded all of Bauserman’ s money to him.  On September 30, 2015 the UIA issued a decision on its own REVERSING the fraud finding.  This reversal was clearly strategic:  the UIA never should have made a fraud finding in the first place, When the UIA was sued by Bauserman, they admitted they were wrong and reversed itself just in time for it file this motion to dismiss where it falsely told the court that Bauserman had received all his money back.  It is untrue that Bauserman has been refunded all his seized money.  We do not expect that the UIA will win this argument.

Next the UIA claims it has immunity from suits for damages.  This is a complicated argument and one that we anticipated.  There are legal precedents which if applied correctly by the Court of Claims judge will result in a rejection of this argument.  We are likely to prevail on this issue.

Finally, the UIA argues that the case should be dismissed because a claim for a constitutional violation cannot occur if the claimant can still appeal the adverse determination administratively.  In this case, Bauserman attacks the entire overpayment, penalty, garnishment tax intercept SYSTEM as constitutionally defective.  There is no way for an individual to challenge the constitutionality of the SYSTEM through the administrative appeal process.  It for this reason as well as other legal arguments that we believe the UIA will fail in this argument.

Bauserman Files an Amended Complaint

On October 19, 2015, a First Amended Complaint was filed with the Court of Claims.  We have posted the First Amended Complaint for you to review.  Two new Class Representatives have joined the lawsuit:  Karl Williams and Teddy Broe.  In addition to these new Class Representatives, new claims have been added.  The new claims are:

  1. UIA routinely imposes a higher level of penalties then permitted by the Act,
  2. UIA aggregates overpayments in order to impose a higher level of penalties upon claimants in violation of the ACT,
  3. UIA collects interest on penalties in violation of the ACT, and
  4. UIA utilizes wage garnishments to collect penalties in violation of the ACT.
  5. UIA improperly pursues the recovery of overpayments beyond the time period permitted by the ACT.
  6. UIA, seizes tax refunds from joint taxpayers without proper allocation between the responsible and non-responsible taxpayer, and
  7. UIA routinely fails to repay to claimants or to repay on a timely basis funds which were seized by the UIA or paid over to UIA by the claimant to satisfy overpayments and penalty determinations which were reversed at a later time.

Schedule for Resolving the Motion to Dismiss

On November 9th, the UIA will file with the Court a Supplemental Motion to dismiss which will address the issues raised in the First Amended Complaint.  We will have until December 4th to file a response to the Supplemental Motion to Dismiss.  The UIA will be able to file a Reply to our arguments by December 28th. Once the briefs of counsel have been submitted to the Court, the Court will either schedule a date for Oral Argument in open court or the court will decide the Motion based on the filed papers.  If we receive notice of an Oral Argument Hearing we will inform of that date, time and place by posting a notice on the Website.  We will also notify you of the Court’s decision in a similar manner.

Collecting Relevant Information From UIA

We served with the original Complaint requests for the UIA to produce information that we are entitled to describing the nature of the operations under examination. The UIA has filed inadequate responses to our requests for information under the control of UIA. We post these inadequate responses for your review. This data will permit us to advise the court of the numbers of Michigan citizens affected by the illegal UIA practices alleged in this lawsuit.  The UIA has refused to provide this information and filed a motion on October 22nd for an Order) known as a Motion for Protective Order) excusing it from sharing with us (and you) the relevant information about how this system is supposed to work, how it has actually worked and the nature and extent of the injuries caused to thousands of our fellow citizens.  We have posted the UIA’s Motion for Protective Order for your review.  We are in the process of negotiating with the defense attorneys to determine if a compromise on this issue can be reached.  If we receive information about the case from the UIA we will post it on this website if appropriate for public disclosure.

Motion for Class Certification

We are in the process of preparing a Motion for Class Certification to be filed with the Court by December 9th. Class Certification means that everyone who fits within the Class Definition will be able to participate in the case and will benefit from a successful outcome and will also be bound by an outcome in favor of UIA.  When that Motion is filed we will post it on this website.

United States Department of Labor (USDOL) Intervenes

Professor Luke Shaefer of the University of Michigan and Steven Gray General Manager, Michigan Unemployment Insurance Project, prepared a detailed complaint to the USDOL pointing out the abusive practices of the UIA.  On October 1, 2015, the USDOL “reminded” the UIA that it was required to provide adequate notice to claimants charged with fraud and to provide them with a meaningful opportunity to protest the fraud determination. The USDOL reminded the UIA that it is required to have a live person review all fraud determinations. Determinations based solely on computer matchings are strictly prohibited.  We have posted the letter of complaint from the University of Michigan and the USDOL Statement for you to review.

New Legislation is proposed

House Bill (HB) 4982 was introduced in mid-October 2015.  If this proposal becomes law, the UIA will be prohibited from making fraud determinations solely by computer program.  We have posted HB 4982 for you to review.

Next Steps

The team of lawyers continue to interview individuals to determine if they can assist the case by serving as a Class Representative.  Some interviews are conducted by phone.  Other interviews are done face to face.  Attorney Neal Young is handling interviews on the Westside of the State. Kevin Carlson, Michael Pitt, Jennifer Lord and Rachael Kohl are conducting interviews in Southeastern Michigan.

It is very important that you contact us and let us review the facts of your situation.  At that time, a lawyer can assist you in deciding the best course of action for to take.

If you have experienced an actual loss of money (garnishment, state or federal tax intercept, payments by you directly to UIA or infests of UIA benefits otherwise due you) and overpayment and/or penalty assessment is possibly wrong, please contact us at: or

Call Rachael Kohl at 248-398-9800