Key ruling keeps lawsuit alive over jobless fraud mess

DETROIT (AP) - A group of Michigan residents wrongly accused of fraud while collecting unemployment benefits has won a key ruling in a lawsuit against companies that designed or managed the automated system.

The lawsuit in Detroit federal court also targets some key state officials who were associated with the state's unemployment agency.

Thousands of people were falsely accused of cheating Michigan's unemployment system. Some had to file for bankruptcy.

Federal Judge David Lawson last week said a lawsuit can go forward on a variety of constitutional claims. He says there was "no conceivable rational basis" for terminating benefits, even after learning that the automated anti-fraud system was a bust.

A lawsuit in state court was dismissed. Gov. Rick Snyder has talked about creating a fund for victims.