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Motion Seeks to Suspend Collection Activities Amid Unemployment Benefit Lawsuit

— March 16, 2022

A motion was recently filed in an attempt to pause collection activities amid the unemployment benefit lawsuit in Michigan.

Michigan’s Unemployment Insurance Agency is under fire in a class-action lawsuit alleging the agency is illegally issuing overpayment letters to claimants and pursuing aggressive collections actions. Earlier this week, plaintiffs in the suit “asked the court to suspend collection activities Thursday after the state billed them for as much as $50,000 for what the state calls overpayment of unemployment insurance benefits.”

Legal gavel
Legal gavel; image courtesy of succo via Pixabay,

When commenting on the matter, Attorneys David Blanchard and Frances Hollander of Blanchard & Walker said they “filed the motion for a preliminary injunction and a supporting brief in the Michigan Court of Claims, arguing that the agency is acting outside its legal authority in pursuing collections without giving the plaintiffs due process.” The brief states:

“The challenged actions create life-altering consequences for claimants who sought assistance at a time of great need.”

The suit itself was filed back in January and argues the state agency is “violating the rights of Michigan residents under the state constitution by undertaking collection activity,” which, according to the suit, includes the following:

  • Seizing tax refunds, garnishing wages or withholding future benefits, based on “monetary determinations” issued more than a year after benefits were paid.
  • Pursuing collection activity even though the overpayments are a result of agency error.
  • Pursuing collection activity against claimants who have pending protests or appeals and before a determination on their claim has become final, among other reasons.

The brief further states:

“Plaintiffs and thousands of other Michiganders are facing financial instability, food instability, inability to pay for transportation, late payment fees and utility shut-off fees, inability to pay rent or mortgages, and exorbitant interest rates on loans simply to pay for basic necessities of life should the agency continue its collection activity.” 

The brief also notes that, without a preliminary injunction, the agency “will likely have wrongfully recouped millions of dollars outside of the law, with no clear statutory remedy for returning this money to those harmed.”

Around the same time the class-action suit was filed, the U.S. Department of Labor began issued guidance on how states should handle waivers for overpayments when claimants are not at fault. To help clarify some of the confusion over who was eligible to receive unemployment benefits during the COVID shut downs, Gov. Gretchen Whitmer (D) “signed a bill into law that makes clear that part-time workers were eligible for federal pandemic unemployment benefits.” However, even with that law on the books, claimants are still receiving overpayment letters.

When asked about the waivers recently, Nick Assendelft, a communications manager for the UIA, said “the agency continues to work with federal and state partners to understand the guidance…this guidance is nuanced and there are several broad categories of overpayments to evaluate.”


Motion for preliminary injunction to suspend collection activities filed in unemployment lawsuit

Motion asks Michigan court to pause collections on pandemic unemployment bills

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