State loses key ruling in lawsuit over bogus jobless fraud

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DETROIT (AP) — A lawsuit can move forward over how Michigan bungled unemployment fraud cases.

A federal appeals court on Thursday says state officials who worked at the department that oversees jobless benefits can be sued.

During the Snyder administration, a computer system with no human supervision accused thousands of people of fraud. Tax refunds were seized, and the accused were hit with penalties and fines. They sued, claiming their due process rights were violated, among other allegations.

The appeals court says “every reasonable agency employee” should have known that penalizing people without adequate notice violated their rights.  The court notes that the computer system had a “staggeringly high ratio of false fraud determinations.”

The Unemployment Insurance Agency declined to comment. A separate but related case is pending at the Michigan Supreme Court.

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