LANSING, Mich. (AP) -- Michigan's Unemployment Insurance Agency took back its decision to attend administrative insurance fraud hearings only when large sums of money are at risk after lawmakers said the policy ignored state law.
Agency spokeswoman Lynda Robinson told The Associated Press Wednesday that a directive sent to employees Friday rescinded an earlier order that instructed employees to show up at fraud hearings only if the amount of fraudulent benefits is at least $15,000.
The AP has requested a copy of the directive under the Freedom of Information Act.
The agency's reversal, which was first reported by the Detroit Free Press on Wednesday, comes after lawmakers criticized the agency last week for not informing the Legislature of the decision. The agency's director, Steve Arwood, was called to testify before the Senate Appropriations Subcommittee on Licensing and Regulatory Affairs last week.
During the hearing, lawmakers said the federally funded agency was ignoring state law by not going after all fraudulently claimed benefits. In 2011, lawmakers passed legislation to reduce the threshold for a felony charge for unemployment insurance fraud from $25,000 to $3,500.
Arwood, who also serves as director of the state's Department of Licensing and Regulatory Affairs, told the committee that the decision was made on a temporary basis in light of significant across-the-board staff cuts. The agency was forced to do reduce staff from 1,200 to 800 employees in October because of a reduction in federal funds, he said. The job cuts included 20 people whose primary responsibility was to attend hearings, he said.
Republican Sen. Jack Brandenburg of Harrison Township in Macomb County called the agency's decision to go after only larger sums a serious breach of credibility.
"The legislation reads that the past threshold was $25,000. We made it 3,500 for a reason and you chose to ignore that," he said last week.