MIDAS touch costly to many Michiganders

Virtually everyone now knows about the lead poisoning horror that afflicted Flint, Mich., costing the state many millions and leaving thousands of children with uncertain futures.

But there’s been far less attention paid to another terrifying, bewildering nightmare that hit tens of thousands of Michiganders, improperly seizing their assets and saddling them with draconian penalties that in some cases cost them their homes.

Worse, they were essentially shamed as criminals who tried to defraud the state’s Unemployment Insurance Agency. This happened to more than 37,000 Michigan residents, most over a two-year period ending in August 2015.

But all were innocent, the victim of a computer run amok, a computer Gov. Rick Snyder’s administration was so proud of they named it MIDAS. Though that formally stood for Michigan Integrated Data Automated System, it also recalled the mythical ancient king who turned everything he touched into gold. MIDAS the computer turned people’s lives into hell.

“It’s hard to grasp the damage done,” said Jennifer Lord, an employment law attorney with Pitt McGehee.

What happened was this: The state unveiled its new US$47 million MIDAS computer in 2013, while laying off about 400 agents who had been paid to check for fraud. The state said the computer would do that — and it did, with high efficiency.

People’s records were flagged. They were tracked down and assessed with the harshest penalties in the country. Those tagged were forced to pay back four times the amount they improperly received, plus additional penalties and 12 per cent interest. Most were bewildered.

They had essentially no right of appeal. People lost homes, relationships — lives were horribly afflicted. Since few had the ability to pay, MIDAS began garnisheeing their wages, even tracking them down in other states.

Nobody seemed to notice the incidence of fraud seemed vastly higher than ever.

Many of those accused of fraud were neither highly educated nor well-connected. But some knew something was wrong and began contacting lawyers. Three came to Lord.

Finally, the state checked, and found MIDAS had run amok. The computer was flagging any discrepancy on any application as proof of fraud on behalf of the person making the claim. No human checked the computer’s work.

Unemployment Insurance Agency data shows during the 22 months MIDAS was running, it flagged 53,633 cases as fraudulent. But fewer than seven per cent really were. The state improperly accused more than 52,000 of fraud, and seized money from most. The cost of the human devastation may never be known.

The state has admitted its error. Michigan has been willing to pay back the money it seized to people who can prove their claim.

But there’s been no formal apology. In December, the governor signed a package of bills overhauling the Unemployment Insurance Agency and drastically lowering the penalties for fraud. But what wasn’t in those bills was a victims’ compensation fund, though one may soon be passed. The legislature and governor agree one is needed, though they differ on the amount. The governor’s office is talking in terms of $20 million; State Rep. Joe Graves, (R-Linden,) the sponsor of the other bills, thinks $30 million would be more appropriate.

Lord believes “$100 million would be closer to what is needed to make these folks whole.”

Though she doesn’t make a big deal about it, something is needed to make her whole, too. Over the last three years, she has worked “thousands of hours” without being paid.

Lawyers for these cases could be paid by the state if what they are doing is declared a classaction lawsuit. Originally it was, but the Michigan Court of Appeals reversed that on a technicality, saying the defendants waited too long. They appealed and, now, whether the attorneys toiling on behalf of those unjustly accused ever get paid is up to the Michigan Supreme Court.

The Unemployment Insurance Agency mess wouldn’t seem to have much in common with the other great Snyder administration scandal, the poisoned water in Flint. Except, the attorney said, “It is another case of governing by spreadsheet, a philosophy of treating people as statistics.”

And both cases may have cost the state far more than a little caring and compassion ever would.