DETROIT — Paul Kreps waited months for pandemic unemployment benefits.
But the checks totaling $25,000 never arrived.
Michigan’s Unemployment Insurance agency approved Kreps, 31, for benefits when COVID-19 restrictions forced him to shut down his Monroe pest control business in April 2020. But more than two years later , he still has not seen a penny.
“It upset me,” he said. “Because we are here, we lose everything we have. They say they send me money, but I can’t get it. My children are hungry, we have no food, we are literally starving because we have no income.
Kreps is now one of five people suing Michigan’s unemployment agency.
Related: Unemployment waivers relieve thousands of people. More Michiganders are still waiting.
A class action lawsuit filed in federal court by David Blanchard of Ann Arbor-based Blanchard & Walker in late August claims the agency froze payments for thousands of workers during the pandemic while not allowing workers to appeal . Blanchard is also behind another class action lawsuit alleging that the unemployment agency unlawfully requested reimbursement of benefits.
“It stands up for those left behind in this pandemic who were eligible, otherwise qualified, and who still cannot be paid,” Blanchard said.
The unemployment agency responded to a request for comment highlighting Director Julia Dale’s recent efforts to “improve access to unemployment benefits for skilled workers who have lost their jobs through no fault of their own.” The agency announced last month that it had received a $6.8 million grant to help underserved communities.
Payments halted for thousands of workers, lawsuit says
The central claim of the 53-page complaint is that Michigan workers have been denied due process.
It alleges that five plaintiffs were entitled to unemployment benefits, but the state agency violated this “well-established right” by cutting off benefits or revoking eligibility without providing an appeal process. Workers then left “without a lifeline” were placed in “financially difficult situations” as Michigan unemployment hit nearly 23% in April 2020.
“Why are you doing this, people? Michigan’s unemployed poor are being treated like this,” Blanchard said.
Related: Michigan unemployment agency illegally demanded reimbursement, class action claims
Kreps qualified for $362 a week from the state and additional help from the federal pandemic unemployment assistance program. But his MiWAM account, the online unemployment system, shows that each of the 44 weekly payments has been frozen by a “stop payment indicator”.
“I sent them all my information: my social security card, my birth certificate, my marriage license. And I couldn’t hear anymore. I called them every week and they said I still had to certify,” he said.
The lawsuit says Michigan’s employment agency slapped tags like ‘stop payment flag’ or ‘benefit payment review’ on thousands of eligible applications, causing some to wait months while “many were never paid at all”.
Kreps, unemployed for the first time in his life, lived for almost a year without income or unemployment assistance.
During this time, he paid the bare minimum on utilities. Her parents took out a second mortgage to prevent the family of four from losing their home. And the dangling promise of benefits has taken its toll on Kreps, his wife of 11 years and their two children.
“We lost pretty much everything we had,” he said. “I couldn’t find a job even though I tried, but no one was hiring because it was a pandemic. We literally lost everything. We were lucky to have my parents who took out this second mortgage to help us out, but without them we would have been homeless.
Related: Michigan unemployment agency ordered to stop collections for some workers
An October 2020 policy prompted the agency to “arbitrarily freeze benefit payments” without explaining why, according to the complaint.
As a result, workers struggled to pay rent and mortgages, took out high-interest payday loans, and borrowed from retirement accounts — all of which the lawsuit said had an “impact disparate on communities of color, mothers and caregivers, and other disadvantaged populations.”
“It’s fine if you need to review it, if you have the ability to review it,” Blanchard said. “But instead it put people under scrutiny and froze their accounts knowing the agency doesn’t have the resources to actually look into it. Just a recipe for disaster, just absolute purgatory and a financial ruin for people.
Embroiderer, cooking demonstrator and teenage worker
Besides Kreps, four other workers are named in the lawsuit.
He claims they are all Michigan workers who never received payments, were denied benefits when appealed, did not get their benefits back after a redetermination, or were hit with a notice of overpayment requiring reimbursement.
“It’s illegal,” Blanchard said. “It’s well established. There is precedent that you cannot arbitrarily deprive people of benefits without a hearing.
Claimant Robin Shipe faced ‘utter confusion’ when he tried to get unemployment benefits.
As the owner of a printing and embroidery business, Shipe was declared eligible for aid until the agency froze her account and reversed its decision. She appealed twice, but the lawsuit claims “the agency removed Shipe’s appeal” and issued a third new ruling in May 2022. She then appealed a third time a month later.
“To date, Shipe has never received pandemic relief benefits,” the lawsuit states.
Related: Michigan wipes out $431 million in pandemic unemployment overpayments
For Zachary Brazil, whose job is not specified in the lawsuit, and a teenage worker identified as IF, their benefits would have been frozen.
The lawsuit says Brazil’s payments were blocked after a few weeks by a stop-payment indicator and that “most benefits remain frozen” despite its pleas.
For IF, who worked part-time for a center of activities, the employment agency went back and forth on her request.
After first receiving approval for $160 a week in April 2020, the agency reviewed IF’s account in January 2021, found her eligible a month later, and then found her retroactively. ineligible for all payments. It wasn’t cleared up until July of this year, when the Unemployment Insurance Appeals Board issued a final decision.
Diana Boudrie was fired in April 2020 from a company that held cooking demonstrations at Costco stores. After receiving benefits for 19 weeks, her eligibility was canceled in November 2020.
Even though the lawsuit says Boudrie later filed a timely protest, the agency still demanded repayment of $9,440 under threat of collection activity.
Kreps, who got a job in June 2021 as a truck driver, hopes the state will eventually pay him the $25,000. The money will go directly to paying off his parents, and he’s also optimistic the lawsuit will spur change at the unemployment agency.
“My biggest hope is that they will look into this and give all these people what they deserve,” he said. “And for the state to realize that something is wrong here.”
The lawsuit seeks class status, an injunction, damages for plaintiffs and the creation of a “common fund” to reimburse people who “prematurely” repaid their benefits.
If granted, a court order would require the UIA of Michigan to promptly pay benefits, stop freezing benefits without due process, establish a procedure for recovering overpayments, and remove all termination flags. of payment until the appeals can be considered.
Related: Who benefits from the cessation of unemployment levies? The Michigan agency asks the judge
Blanchard says the lawsuit also brings to light longstanding issues at Michigan’s unemployment agency.
“It’s absolutely no secret that the system is broken,” he said. “The computer system and the data management system never worked. It has only crumbled in recent years. The agency never had the resources it needed throughout this pandemic.
Among other reforms, Dale recently began replacing the agency’s “decade-old computer system,” according to a statement from Michigan’s UIA.
After being inundated with claims at the start of the COVID-19 pandemic, the unemployment agency has paid nearly $40 billion to 3.48 million people since March 2020. According to their account, 99.8% of claimants eligible have been paid at least once, approximately 7,000 not having.
Rolling out pandemic unemployment benefits to so many people, however, has been fraught with pitfalls, including sudden changes in agency leadership to billions of frauds and a mistake that led to nearly 700,000 people are declared retroactively ineligible for aid.
Since the first lawsuit was filed in January, Blanchard’s law firm has heard from 6,500 job seekers.
“The response has been overwhelming. People need help and can’t get it,” he said. our legal system when so many people can be affected by a breach.”
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