LANSING, Mich. (AP) — Residents who were falsely accused of defrauding Michigan’s unemployment benefits system won another victory Thursday when the state appeals court ruled 3-0 that their lawsuit seeking financial damages should proceed.
The Michigan Supreme Court decided in April to allow the affected residents to sue, but ordered the lower court to consider a separate issue potentially enabling the state to escape liability. The appeals panel said the residents have legitimate constitutional claims that, if proven, allow them to recover damages.
“It’s important for these plaintiffs, but it’s also an important legal principle that has now been definitively answered,” said Jennifer Lord, a lawyer who has been leading the suit that seeks class-action status for between 26,000 and 40,000 residents.
Between 2013 and 2015, a disastrous automated computer system at Michigan’s Unemployment Insurance Agency wrongly accused thousands of people of collecting excessive benefits based on discrepancies in reported earnings, hours worked and other information. Although refunds were made to those who were forced to repay money and substantial penalties, the state is the target of suits claiming people’s due-process rights were violated while they tried to untangle themselves from the mess.
A message seeking comment on whether the state will appeal was left with Attorney General Dana Nessel’s office. Nessel, who took office this year, has expressed support for people who were incorrectly accused of fraud. If no appeal is filed, Lord said, the case can be remanded to the Court of Claims for the start of taking depositions, obtaining documents, certifying the class and analyzing damages “so that we can try and finally help these people.”