LANSING — Michigan’s Unemployment Insurance Agency has settled a lawsuit in which it was sued for using an automated computer system that falsely accused thousands of people of fraud.

The suit was dismissed Thursday by U.S. District Judge Robert Cleland under an agreement between the state and the plaintiffs.

The state said the deal codifies practices put in place after it ceased so-called “auto-adjudications” in 2015. The United Auto Workers union, Sugar Law Center and individuals accused of fraud didn’t seek financial damages.

Lawyer David Blanchard said Michigan will implement safeguards to ensure claimants are notified of accusations and can respond.

He said the state for too long denied the problem, but his clients are “heartened” by new leadership acknowledging the problem.

Another lawsuit seeking financial damages is ongoing in state courts.