Michigan MiDAS unemployment insurance fraud detection

MiDAS (Michigan Integrated Data Automated System) is an automated information system used by Michigan's Unemployment Insurance Agency (UIA) to collect unemployment taxes from employers and to pay unemployment insurance benefits to eligible claimants.

A new MiDAS system was introduced in 2013 to ensure that unemployment checks went only to people who deserved them, increase UIA’s efficiency and responsiveness to unemployment claims, and reduce UIA’s operational costs by cutting over 400 workers.

Devised, developed and implemented by software companies SAS Institute, Fast Enterprises, and CSG Government Solutions, the new system searched records of employers and claimants in its database, then flagged people for potential unemployment fraud. 

It then sent questionnaires to an email address on the UIA website that 'recipients may not have had reason to monitor', gave them 10 days to respond, and sent a letter informing them they had been charged with fraud. After a 30-day appeal period, the system began dispersing wage and tax refunds, according to Undark.

Risks and harms 🛑

Michigan's MiDAS unemployment insurance fraud detection system has been accused of erroneous determinations leading to unjust benefit denials, exacerbing financial hardship for vulnerable individuals, and violations of due process rights. 

Legal, regulatory 👩🏼‍⚖️

• Bauserman v. Unemployment Ins. Agency

• Letter to Gay Gilbert, Administrator, U.S. Department of Labor (2015). Michigan Unemployment Insurance Agency: Unjust Fraud and Multiple-Determinations (pdf)

• George Washington University. ETI AI Litigation Database: case details

Investigations, assessments, audits 🧐

• Office of the Auditor General (2016). Performance Audit Report: MiDAS (pdf)

• Office of the Auditor General (2016). Performance Audit Summary (pdf)

News, commentary, analysis 🗞️

• https://www.mlive.com/news/2019/12/suit-against-michigan-unemployment-agency-can-proceed-court-rules.html

• https://www.michiganradio.org/post/state-appealing-ruling-unemployment-insurance-fraud-lawsuit-michigan-supreme-court

• https://www.metrotimes.com/news/criminalizing-the-unemployed-2353533

• https://time.com/5840609/algorithm-unemployment/

• https://www.todaysgeneralcounsel.com/ai-run-amok-falsely-accuses-thousands-of-unemployment-fraud-says-class-action/

• https://www.mlive.com/news/detroit/2016/05/after_some_falsely_accused_sta.html

• https://undark.org/2020/06/01/michigan-unemployment-fraud-algorithm/

• https://www.detroitnews.com/story/news/local/michigan/2015/09/14/class-action-lawsuit-filed-tax-refunds/72255478/

• https://www.lenconnect.com/news/20170130/state-of-michigan-apologizes-for-unemployment-fiasco-wants-to-reduce-penalties/1

• https://spectrum.ieee.org/riskfactor/computing/software/michigans-midas-unemployment-system-algorithm-alchemy-that-created-lead-not-gold

• https://www.theguardian.com/us-news/2016/dec/18/michigan-unemployment-agency-fraud-accusations

• https://www.theregister.com/2017/03/08/fraud_detection_system_with_93_failure_rate_gets_it_companies_sued/

• https://www.bridgemi.com/michigan-government/broken-human-toll-michigans-unemployment-fraud-saga

• https://www.theatlantic.com/technology/archive/2020/06/michigan-unemployment-fraud-automation/612721/

• https://www.techlawx.com/post/anti-fraud-software-leads-to-constitutional-claims

• https://eu.freep.com/story/news/local/michigan/2016/04/28/ruling-awaited-class-action-suit-against-ui-agency/83605436/

• https://www.fox17online.com/2017/08/11/michigan-reverses-70-percent-of-fraud-cases-to-refund-21m/

• https://www.mlive.com/news/2017/08/state_reverses_more_than_70_of.html