(Source: MIRS.news, Published 01/29/2024) A judge gave final approval Monday to a $20 million settlement – money the Legislature set aside in September 2022 – to fully compensate unemployment claimants who were falsely accused of fraud.
The approval came after Court of Claims Judge Douglas B. Shapiro heard from one person objecting to the settlement in the 2015 lawsuit because her claim was denied.
"I congratulate you on a 100 percent settlement or better for all of those that you were able to properly represent, given the limitations set forth by the (Michigan) Supreme Court," the judge told the attorneys.
The awards are expected to be distributed before April.
The Unemployment Insurance Agency initially estimated that upwards of 40,000 people had been affected by the Michigan Integrated Data Automated System’s (MiDAS) auto-adjudication fraud declaration between 2013 and 2015.
However, that number was narrowed in 2019 when the Michigan Supreme Court limited the pool to those individuals who experienced their first "economic taking" – such as the seizure of tax refunds and paychecks – to March 9, 2015, and after.
Of the 8,205 eligible class members identified, 3,206 filed claims.
"This is an important and groundbreaking case that not only changed the landscape of civil rights law in the state of Michigan, it resulted in a settlement in which every single eligible class member will receive an award of more than 100 percent of what was seized from them," said Jennifer Lord, class counsel from Pitt McGehee Palmer Bonanni & Rivers in Royal Oak. ". . . These are awards in the thousands of dollars.”
Kevin Carlson, also an attorney with Pitt McGehee, said the settlement has grown to nearly $21 million with interest and after an estimated $6.6 million for attorney fees plus additional fees for administration and associated bank fees, the net available fund for claims is $13.2 million.
Of that amount, an estimated $8.8 million is for the "economic loss" pool and $4.4 million is for the "hardship" awards. The latter category includes adverse actions such as bankruptcies and evictions.
Each of the 3,206 class members will receive an economic award, with an average of $1,923 going to each member for a total of $5 million. The remaining balance will be split evenly – at $1,139 each as a "supplemental award" – between each class member.
The hardship awards – an average of $4,131 – will go to 969 registered class members.
Shapiro heard from one individual, Nakeya Brown, who objects to the settlement.
Brown, who drove from Florida for the hearing, said she was "denied everything" when she made a claim and when asked, she said the IRS first seized her taxes in April 2015.
Although that is after the eligible claim date, Shapiro learned that an administrative law judge ruled Brown was ineligible for unemployment benefits after a hearing because she voluntarily quit her employment with McLaren Regional Medical Center.
"I did not voluntarily quit," Brown said.
Shapiro empathized, but said the legal determination has been made and he lacks the authority to change it.
"You are not eligible to receive compensation from this class action," the judge said. "I apologize for that. …
"I appreciate very much that you and your husband came all this way, and you went through great personal hardship as a result. Regrettably, there's nothing I can do to change what has happened in the past and so I have to deny your objection to the settlement," Shapiro added.
The plaintiffs, Grant Bauserman and Teddy Broe, alleged their due process rights had been violated by the government's seizures. A third plaintiff was dismissed because his claim was filed too late.
The two remaining plaintiffs will receive service awards of $15,000 each, according to the agreement.
Meanwhile, a second proposed class action suit continues to move forward in state courts that challenges the state's handling of unemployment claims during the pandemic and a separate federal lawsuit recently reached a settlement deal.
