Bauserman v Unemployment Insurance Agency
Digest No. 20.09
Cite as: Bauserman v Unemployment Insurance Agency, unpublished decision of the Court of Claims, entered May 10, 2016 (Case No. 15-000202-MM).
Bauserman v Unemployment Insurance Agency, unpublished opinion per curiam of the Court of Appeals, issued July 18, 2017 (Docket No. 333181).
Court: Court of Claims and Court of Appeals
Appeal pending: Yes
Date of decision: May 10, 2016; July 18, 2017
View/download the full Court of Claims decision
View/download the full Court of Appeals decision
View/download the full complaint
HOLDING: The Court of Claims held that the Agency’s motion to dismiss was denied because plaintiffs complied with the notice provisions of MCL 600.6431, the Court has subject matter jurisdiction, and the plaintiffs’ claims are not barred by governmental immunity.
The Court of Appeals reversed the Court of Claims holding. The case was remanded for entry of an order granting summary judgment for the Agency
The matter is currently under review by the Michigan Supreme Court.
FACTS: Named plaintiff was terminated from his employment and applied for unemployment benefits. He received benefits for a over a year. While he was receiving benefits, he received from his former employer a lump sum deferred payment of his pro rated bonus from the previous year, which he earned prior to his termination. MIDAS detected a discrepancy and concluded that plaintiff received benefits while he was earning income.
The UIA sent a request for information relative to ineligibility or disqualification to plaintiff’s online MiWAM account, however he was not checking the account as he was no longer receiving benefits at the time. When he finally saw the message months later, he began writing to the Agency to explain the lump sum. The Agency never responded.
Eventually, they notified plaintiff that he had been overpaid benefits and would be assessed a penalty. Plaintiff again contacted the Agency explaining the bonus. Then the United States Department of Treasury notified plaintiff that his federal income tax refund had been seized by the State of Michigan to collect on his unemployment debt. Similar action was taken by the State of Michigan Treasury.
Finally, Plaintiff received a redetermination that its earlier fraud determination was null and void. Plaintiff had filed a complaint in the Court of Claims alleging that the Agency’s fraud detection program, and its collection and seizure of assets, violated the due process clause of the Michigan Const 1963, Art 1, § 17.
DECISION: The Court of Claims decided that plaintiffs’ causes of action did not accrue when Agency first notified them of their liability for unemployment but rather when the Agency issued a redetermination which concluded that the plaintiff had not received UIA benefits fraudulently. The administrative process fails to afford sufficient relief to plaintiff’s challenging an entire statute and policy, therefore a constitutional court claim is viable and there is no governmental immunity. The Agency’s motion to dismiss on lack of standing is denied.
The Court of Appeals decided that the plaintiffs’ cause of action accrued when “the wrong on which they base their claim was done.” The Court decided the garnishment of wages and interception of tax returns was not the initial event given rise to their claim. Rather, when the Agency issued notices of its determinations and the plaintiffs were not given requisite notice or opportunity to be heard was the initial wrong.
RATIONALE: The Court of Claims found that the plaintiffs’ causes of action did not accrue when the Agency first notified them of their liability for unemployment benefits and penalties, but much later. The causes of action accrued when the Agency issued a redetermination that concluded that plaintiffs had not received UIA benefits fraudulently. At the time the Agency issued the redetermination, then plaintiffs could fully allege the elements of the claim. The amended complaint was filed within six months of the redetermination dates, therefore the plaintiffs complied with statutory requirements.
Furthermore, the Court found that the administrative process by which the plaintiffs could appeal within the Agency failed to afford sufficient relief to plaintiffs wishing to challenge the entire statutory and policy scheme. Therefore the Court found no governmental immunity existed in this case.
The Court of Appeals found that the forfeiture of monetary assets was the damage resulting from the wrongful conduct of the Agency and therefore did not rise to the event given cause for a claim. The Court said this is consistent with the Michigan Supreme Court’s recent decision in Frank v Linkner, 894 NW2d 574 (2017) where the court held that the plaintiffs’ argument “conflates monetary damages with harm.” Frank involved a shareholder oppression action not an unemployment benefits action.
Since the parties did not dispute the date of named plaintiff’s notices of redetermination were December 3, 2014, the action filed on September 9, 2015 is well beyond the six months following the event that gave rise to the cause of action.
Digest author: Sara Posner, Michigan Law, Class of 2017
Digest updated: December 5, 2017