STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

PAMELA J BERGER, Claimant

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 03000631


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW


The claimant began a claim for unemployment benefits in Wisconsin on November 7, 2001 (week 45). Her last employer before that claim was Consolidated Biscuit Company of South Beloit, Illinois, now known as Bake-Line Group LLC. The base period for that claim was the third quarter of 2000 through the second quarter of 2001. The employee had worked for employers in both Wisconsin and Illinois during that base period, and elected to file a combined wage claim based on the employment in both states. Her weekly benefit rate on that claim was computed at $185.

The claimant's maximum benefit account (for regular benefits) on that claim was $4,231. She filed weekly claims for partial or total unemployment from week 45 of 2001 through 19 of 2002, when she exhausted her regular entitlement. Thereafter she filed for benefits under the TEUC program, and received such benefits of $2,082 for weeks 20 through 32 of 2002 before the department on January 15, 2003, determined her ineligible for those benefits by the determination under appeal in this case.

The first issue raised by this appeal is whether the employee was eligible for the TEUC benefits that she received for weeks 20 through 32 of 2002.

TEUC became payable under the Temporary Extended Unemployment Compensation Act (TEUCA) of 2002, P.L. 107-147, Title II. Sec. 202 (b) of that law provided that TEUC is payable to individuals who (1) file an initial or additional claim for regular benefits on or after March 15, 2001; (2) have exhausted regular benefits or have no such benefit rights due to the expiration of a benefit year ending during or after week 11 of 2001; (3) have no rights to regular or extended benefits under any state or federal law, and (4) are not receiving benefits under Canadian law. See 67 Fed. Reg. 57066 (No. 173, September 6, 2002).

The only criterion in question here is the third one. The employee's base period on an Illinois claim beginning in week 20 of 2002 was the first four of the last five completed quarters in the year 2001. During that period, the employee earned wages of $3,721.21 from Bake-Line Group LLC during the third quarter of 2001 and $1,117.27 during the fourth quarter of 2001, which was enough to establish an Illinois benefit claim with a benefit rate of $106 per week effective week 20 of 2002. Indeed, after the Wisconsin Department of Workforce Development belatedly discovered the possible Illinois eligibility in January 2003, it took a backdated claim for her as agent for the State of Illinois. She has been paid on that Illinois claim, including for the same weeks for which she received TEUC from Wisconsin, since filing her appeal here. Accordingly, she was not eligible for TEUC as of week 20 of 2002.

The next issue is whether the claimant is required to repay the TEUC benefits that she received despite her ineligibility. In addressing this question, the first question that must be asked is why Wisconsin paid TEUC benefits despite her ineligibility for them. The testimony of the department witness made clear that Wisconsin paid those benefits because it did not seek to investigate whether the employee was eligible in another state. Wisconsin did not investigate despite knowing from the information that it already had collected as part of its normal claim process that she had out-of state employment and thus had potential eligibility in that other state.

The department paid TEUC benefits without investigating whether the claimant met this exhaustion requirement because the Wisconsin Department had decided to automatically convert active claims to TEUC for any claimant exhausting regular entitlement after April 8, 2002. UID 02-09, p. 5 (April 26, 2002 revised version). However, for claimants who had to reopen a claim or file an additional claim to claim TEUC, the department created a computer transaction to reject automatic processing of any TEUC claim for which out-of-state employment had been reported in the previous active base period. The purpose of this reject transaction was to permit the department to determine at that point whether the claimant was eligible for additional regular benefits, including benefits from another state, before paying TEUC. UID 02-09, pp. 5-6. Thus, when the claimant sought to claim additional TEUC benefits in January of 2003 after Congress had extended the program, she had to file an initial claim first and the department then noted that she had eligibility in Illinois as of week 20 of 2002.

The claimant in this case fully disclosed the facts, and did not make any incorrect statements that contributed to her receipt of the erroneously paid TEUC benefits. In such cases, the federal law, as represented by sec. 206 (b) of P.L. 107-147, provides for the state agency to recover such an overpayment, but also permits that agency to waive repayment if repayment is contrary to equity and good conscience. State law waives recovery of an overpayment not caused by claimant error when it is due to department error, without regard to equity. If state law applies to this case, it is precisely the type of case in which the legislative intent is to waive repayment. Although the department's witness argued that determining whether a claimant had eligibility in another state before paying TEUC would have been burdensome and delayed benefit payment, the department is not permitted to ignore obvious eligibility questions merely for its own convenience. The department could have limited its investigation of the issue only to those claimants who had reported out-of-state employment. If it easily can identify those claimants and reject automatic processing when they open or reopen claims, it could have done so just as easily when they were about to transition from regular benefits to TEUC in a continued claim series. The department's failure to timely investigate whether the employee was an exhaustee caused not only the erroneous payment of TEUC, but also double payment of Illinois benefits to the claimant for the same weeks for which she had received TEUC. (1)

The TEUCA provides that the state may apply its own waiver provision if it is not inconsistent with federal law. The State of Wisconsin has decided to apply its own waiver provision and not the federal waiver provision, and such provision is not inconsistent with federal law.

Wisconsin Statute § 108.22(8)(c), provides that the department shall waive the recovery of overpaid benefits if the overpayment was the result of departmental error, and the overpayment did not result from the fault of the employee. Under Wis. Stat. § 108.02(10e)(a) and (b), department error is defined as an error made by the department in computing or paying benefits which results from a mathematical mistake, miscalculation, misapplication or misinterpretation of the law or mistake of evidentiary fact, or from misinformation provided to a claimant by the department, on which the claimant relied.

The overpayment in this case did not result from any fault on the part of the employee. Rather, it resulted from the department's failure to have in place a system to determine whether the employee met the minimum eligibility requirements for receipt of TEUC benefits. The commission finds that such failure on the part of the department was in error that requires waiver of recovery of erroneously paid benefits.

The commission therefore finds that as of week 20 of 2002, the employee was not an exhaustee and thus not eligible for TEUC benefits within the meaning of sec. 202 (b) of the temporary extended Unemployment Compensation Act of 2002.

The commission further finds that in weeks 20 through 32 of 2002, the employee was paid TEUC benefits of $2,082 for which she was not eligible, within the meaning of TEUCA sec. 202 (b) and 206 (b).

The commission further finds that recovery of entire amount of erroneously paid benefits recovery is waived under Wis. Stat. § 108.22(8)(c), because the overpayment did not result from the fault of the employee as provided in Wis. Stat. § 108.04(13)(f), but was the result of a department error. See Wis. Stat. § 108.22(8)(c)2.

DECISION

The decision of the administrative law judge is modified to conform to the foregoing findings and, as modified, is affirmed in part and reversed in part. Accordingly, the claimant is ineligible for TEUC benefits as of week 20 of 2002. She is not required to repay the sum of $2,082 to the Unemployment Reserve Fund.

Dated and mailed August 20, 2003
bergepa . urr : 132 : 8 :  BR 335.03

/s/ David B. Falstad, Chairman

/s/ James T. Flynn, Commissioner

/s/ Robert Glaser, Commissioner

NOTE: The commission did not consult with the administrative law judge regarding witness credibility and demeanor. The commission disagrees with the administrative law judge's conclusion that the state waiver provision is inconsistent with the TEUC waiver provision. The administrative law judge finds that it is not against "equity and good conscience" to require repayment where the employee received both TEUC and Illinois benefits because such would constitute a "windfall" to the claimant. However, the equity and good conscience factor set forth in TEUCA does not indicate that consideration should be given to whether there has been a "windfall" but whether three factors exist: the overpayment was the result of a decision on appeal, the agency gave notice to the individual that the individual might be required to repay benefits in the event of a reversal on appeal, and whether recovery would cause financial hardship to the individual. It is required that all three factors be considered, but all three factors do not have to be met to allow waiver. Therefore, while the financial hardship to an individual is considered, it does not determinative. Further, a determination of whether repayment would cause a financial hardship requires an inquiry into the claimant's financial situation, which was not done at the hearing. The fact that the employee received a "windfall" does not answer the question of whether it would cause the employee financial hardship to repay those benefits.


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Footnotes:

(1)( Back ) Illinois did not deduct or withhold any payment from the claimant to be applied against the TEUC overpayment. In fact, it could not legally do so until the overpayment determination was final, meaning that it was no longer under appeal or appealable. Hence, the double payment. 

 


uploaded 2003/08/25