The Michigan Unemployment Insurance Agency announced Wednesday it chose Deloitte to develop a new online unemployment system for workers and employers. It will overhaul the decade-old Michigan Integrated Data Automated System – known as MiDAS – that has a history of issues around fraud detection.
“We are looking as we move forward with UIA on focusing on a customer-centric approach to implement a system that allows us to be innovative, that’s user friendly, that offers a state-of-the-art interface for both claimants and businesses,” said Michigan Unemployment Insurance Agency Director Julia Dale.
The new Unemployment Framework for Automated Claim & Tax Services (uFACTS) system is projected to cost $78 million over a 10-year contract.
Five vendors bid for the project including current vendor FAST Enterprises. Deloitte currently supports unemployment insurance and tax systems in 15 states including California, Florida and Massachusetts.
Problems have plagued MiDAS since it was implemented in 2013.
Most notably, the computer system decided when someone committed unemployment fraud instead of a human. As a result, about 40,000 Michigan claimants were falsely accused of fraud from 2013 to 2015, prompting the agency to garnish wages and seize tax refunds.
Michigan recently settled a lawsuit over the false fraud scandal for $20 million.
A 2021 report from Deloitte also found Michigan paid out about $8.5 billion in fraudulent benefits during the pandemic while thwarting another $43.7 billion in attempted fraud.
Dale says uFACTS will allow the agency to take a “proactive approach” to fraud detection.
“The other thing I think is especially great – that we don’t necessarily have in our current system – is dedicated workflows for fraud investigation and remediation. I think that’s really going to allow us to manage the fraud investigative work that we do in Michigan in a much better manner,” she said.
With uFACTS, workers will also have easier access to their claims, making them less dependent on the agency. The new system uses responsive design meaning users can access it on their phones.
Dale said uFACTS also improves the agency’s ability to make changes quickly and respond to issue.
“We have, really, as an agency been hamstrung by some of the limitations that we have found in the existing system,” she said.
The current system was strained during the pandemic when a flood of workers filed unemployment claims. In that rush to deliver benefits, an agency mistake led to nearly 700,000 people being asked to pay benefits back – resulting in two lawsuits this year.
Dale doesn’t believe replacing MiDAS earlier could have avoided those issues.
“We would have also potentially been in the middle of an upgrade in the midst of a pandemic, which is not where we would have wanted to be, tying up resources and having a system that was not fully implemented,” she said. “I think the advantage of being where we are now is that we have all these lessons to learn from.”
Funding for uFACTS has already been allocated.
The unemployment agency says there won’t be any interruptions to services as Michigan transitions to the new system.
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