LANSING, MI — Michiganders who say they were falsely flagged for unemployment fraud by the Michigan Unemployment Insurance Agency computer system are going after the state contractors who provided the technology in a federal lawsuit.

“They are the businesses that got paid millions of dollars…. to design and implement the systems that we know positively, unequivocally failed in what they were supposed to do,” said Jonathan Marko, an attorney with Detroit-based Ernst & Marko Law who filed the suit.

He’s representing three plaintiffs — Patti Jo Cahoo, Kristen Mendyk and Khadija Cole — who say they were falsely accused of defrauding the UIA. The suit seeks class-action status.

From Oct. 2013 through Aug. 2015, a state computer system flagged people for fraudulent unemployment claims. In some cases it sent a message to an online unemployment account they’d stopped using long ago, and then automatically found people guilty when they did not reply and assessed 400 percent fines.

The UIA is currently reviewing 50,000 potential cases of fraud flagged during that time period.

The lawsuit, filed in U.S. District Court Eastern District of Michigan, is going after the computer companies behind the computer technology that flagged and automatically determined people had committed fraud. It names three vendors involved with the UIA’s computer system: FAST Enterprises, SAS Analytics and CSG Government Solutions.

The suit claims those state vendors violated the 4th and 14th amendments of the U.S. Constitution and parts of the state constitution as well.

One violation it alleges is of due process. Employers and employees submit information to UIA when an employee seeks benefits. If a discrepancy was found, the suit claims, the case was automatically flagged as potentially fraudulent.

After that, the lawsuit states, the compute prepares a form letter with questions for the recipient. Among those are “Did you intentionally provide false information to obtain benefits you were not entitled to receive?”  and a second asks “Why did you believe you were entitled to benefits?”

According to the lawsuit, claimants were not provided an option to state they believe they are legitimately entitled to unemployment benefits. To indicate that, a claimant would have had to write it in under the “other” section of the form.

“Defendants have affirmatively participated in devising, creating, promulgating, maintaining, supervising, and/or updating a system that deprives claimants of their rights to due process,” the suit claims.

The suit also claims a violation of a provision in the state constitution, which states “Excessive bail shall not be required; excessive fines shall not be imposed; cruel or unusual punishment shall not be inflicted; nor shall witnesses be unreasonably detained.”

People who were determined to have received overpayments were required to pay back the amount plus a 400 percent penalty.

A spokesperson for SAS said the company had begun an investigation.

“We take this very seriously and have begun an investigation. However, it’s too early for us to comment,” said Trent Smith, a government & education specialist with the company’s external communications team.

FAST Enterprises and CSG did not return calls for comment.

Two of the companies named in the suit still have active contracts with the state to service its unemployment agency. FAST Enterprises has a $47 million contract to modernize UIA computer systems and SAS Analytics has a $14.2 million contract for fraud detection at the UIA and the Food Assistance Program.

UIA spokesman Dave Murray declined to answer questions about the agency’s use of those vendors, saying it would be inappropriate for the agency to address pending litigation. Neither the state nor any of its agencies are a party to the suit.

A spokesman from the Department of Technology Management and Budget did not respond to requests for comment. MLive has filed FOIA requests with each agency seeking relevant information.