The records, obtained under Michigan's Freedom of Information Act (FOIA), help explain how the Michigan Integrated Data Automated System (MiDAS), which went online in 2013, could have a 93% error rate during the close to two years it operated without active human oversight.
The records also show that agency officials should have known about the data problem more than one year before August 2015, when they stopped using the system without human intervention.
State officials have refused to say how or why MiDAS falsely accused at least 20,000 Michigan residents of fraud. Many of those accused were charged tens of thousands of dollars, because of Michigan's highest-in-the-nation quadruple penalties, and subjected to aggressive collection techniques such as wage garnishes and seizure of income tax refunds. The agency continues to use MiDAS, but with human verification required for fraud determinations.
Agency officials still will neither confirm nor deny there was a problem importing and converting data into MiDAS from its 30-year-old mainframe computer for unemployment insurance claims.
But decisions issued by administrative law judges who heard appeals of agency fraud determinations, plus internal agency records obtained under FOIA, suggest that not only was some data not successfully imported and converted into MiDAS, but that some data was corrupted or lost in such a way that it could no longer be reproduced, even through the former system.
Judges spot a problem
It's not clear exactly which agency records were affected and which were not.
But as early as the spring and early summer of 2014, claimants presented administrative law judges with records that disproved the fraud allegations. The records had been submitted to the agency and should have existed in MiDAS, but had not been considered when the fraud determinations were made, records of appeal decisions show.
For example, in a July 24, 2014, decision dismissing a fraud allegation, Administrative Law Judge Nancy Bondar wrote that "the fraud notice was issued in error due to the MiDAS system's inability to read fact-finding information."
Two consultant reports on MiDAS prepared by state contractor CSG Government Solutions, which mostly praise the system for efficiency improvements, also point to a problem converting data from the agency's former "legacy" system into MiDAS.
"Two staff members are assigned to work Earned Income (cases) converted from Legacy," CSG said in a May 2014 report obtained under FOIA.
"Converted Earned Income cases present challenges to staff" because "source documentation is often no longer available to support the issue that exists on the claim."
CSG also said in a September 2014 report that tasks related to legacy cases made up 33% of the agency workload, and the backlog was expected to continue.
"Legacy tasks are more complicated for various reasons, including working with converted data," the report said.
When MiDAS was operating without human backup between Oct. 1, 2013, and Aug. 7, 2015, robo-adjudicating cases that went back as far as 2007, it falsely accused about 20,000 Michigan residents of fraud, the agency has acknowledged. The agency is now completing a review of about 28,000 additional fraud findings that involved some human involvement and a lower — though still significant — error rate. Results of that review could be made public as early as this week.
Some of those falsely accused faced not just civil fraud proceedings but criminal charges.
The data problem was referenced in many decisions issued by administrative law judges who heard appeals from claimants who were denied benefits or accused of fraud around the time the new system came online, records show.
"The finding of fraud resulted from a glitch in the agency's new MiDAS system," Administrative Law Judge Winston Wheaton said in an April 29, 2014, decision, throwing out an agency fraud finding against Mason-area landscaping worker Robert Kester.
At the hearing in front of Wheaton, an agency representative confirmed that Kester had accurately reported that he quit his job in August 2013, less than two months before MiDAS came online. Since quitting a job is typically a reason for the agency to deny benefits, which the agency did, MiDAS couldn't have determined that Kester committed fraud if it had access to the report the agency confirmed that Kester submitted.
"The agency representative concedes that claimant committed no fraud," Wheaton said.
How could such mistakes happen?
Wanda Stokes, director of the state Talent Investment Agency since July 2016 and the point person addressing MiDAS and other problems at the Unemployment Insurance Agency, has shed little light on that question. She has refused to say whether MiDAS was a faulty system or if the state was just using the system improperly.
Through her spokesman Dave Murray, Stokes wouldn't give a direct answer about whether there was a problem importing portions of the existing unemployment insurance database or other relevant records into MiDAS. Instead, Stokes issued an e-mailed statement through Murray that said the robo-adjudications had stopped and that reviewing those cases was a top priority of hers.
"That’s a very technical question, and most of the UI leadership has been changed since the period in question," Murray told the Free Press when asked about problems importing data into MiDAS. "The leaders there now are trying to track down an answer for you. I know they are looking into it and hope to have an answer by the end of the day."
Murray never answered the question, despite repeated requests.
Some wrongfully helped, denied
The data problems show up not just in fraud cases, but in cases where claimants were denied benefits, but not accused of fraud.
Take the case of Angelica Haney, who, like many claimants, had a seasonal job that resulted in her applying for jobless benefits on a regular basis, during the part of the year when her working hours and income were reduced.
Haney qualified for some of her benefits because she had two dependents, which she listed in her claim for unemployment insurance benefits filed on June 21, 2013, Administrative Law Judge Carl Ratliff said in his Aug. 14, 2014, decision that overturned the agency's decision to deny Haney benefits.
The dependents had not been factored in when the agency made its determination. How the mistake happened was not clear, but Ratliff was told the agency's June 23, 2013, monetary determination for Haney could "not be located because it predates MiDAS," Ratliff wrote.
Similarly, Colleen Mamelka, then a supervisor in the Michigan Administrative Hearing System where the administrative law judges work, pulled a June 2013 appeal related to a denial of benefits away from a judge and returned the case to the agency, in an order issued May 28, 2015.
The agency's decision "was processed in the agency's prior computer system and, therefore, is unable to be re-created for purposes of scheduling a hearing," Mamelka wrote.
The glitch had disastrous effects for claimants, though it sometimes appeared to benefit them — at least in the short term.
Gregory Saltzman, who had received benefits on an unemployment insurance claim that expired in October 2013, the same month MiDAS went online, opened a new claim on Oct. 27, 2013, but failed to register to work — a mandatory step to become eligible to receive jobless benefits.
Despite that crucial failure, the agency continued to pay benefits to Saltzman through February 2014, records show.
"Somehow in the transition from the old claim to the new claim, the system failed to note the claimant had not registered for work with the new claim," Administrative Law Judge Marten Garn, in a June 19, 2014, decision, said he was told by agency claims examiner Asad Dabas.
Saltzman should have been denied the benefits he received until he registered for work, and the mistake by MiDAS came back to bite him hard.
The agency accused Saltzman of fraud and ordered him to repay the money he received, plus significant penalties.
Once again, missing records were cited when the judge overturned the ruling.
"Mr. Dabas said he found evidence in the agency records to indicate a redetermination of the fraud question was issued and appealed, but said he could not locate the redetermination itself," Garn wrote.
In throwing out the agency's finding of fraud, Garn wrote that "the agency's evidence would be laughable, were it not such a serious matter," since "there is no scenario under which a claimant somehow enhances the likelihood of receiving unemployment benefits by failing to register."
How did state miss this?
John Philo, executive director of the Sugar Law Center for Economic & Social Justice in Detroit, said the records obtained by the Free Press show the agency should have ordered that humans vet any fraud determinations more than a year sooner than it did.
Given the large number of red flags, "it's hard to say that you don't know," Philo said Friday.
Jennifer Lord, a Royal Oak attorney who is appealing the Michigan Court of Appeals dismissal of her class action filed on behalf of claimants falsely accused of fraud, said "the drumbeat was loud in April of 2014," and "what should have happened is they should have turned off the spigot on MiDAS then," instead of falsely accusing thousands of more people of fraud over the next year and several months.
Not all the records that MIDAS could not read or find were generated prior to the system coming online in October 2013. Some were hard-copy documents that were mailed or faxed to the agency by claimants or others and had to be scanned to be added to the system.
"The scanning software is not fully integrated with MiDAS," agency consultant CSG said in the September 2014 report on the system.
"Because claimant faxed the form to the agency, it went into the agency's FileNet system," Administrative Law Judge Elizabeth Haugen said in a Jan. 6, 2015, decision that reversed a fraud finding against Nathan Gazza of Marquette.
"The agency's MiDAS system cannot read documents that are scanned into FileNet, so the information was never processed."
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