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

LAURIE J KOWALCZYK, Claimant

TRADE ACT DECISION
Hearing No. 04200010MD


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 the positions of the parties, 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 became eligible for basic TRA payments (1)  under the Trade Act as of week 36 of 2002 (the week ending September 7, 2002), and she began receiving TRA payments at that time, at a rate of $313/week.

From November 7, 2002 through January 7, 2003, the claimant worked part time in various capacities for a technical college that she was attending as a full-time student. The work was not integral to her course of study, but was solely to assist her with college costs. In weeks 45, 48 and 49 of 2002, she earned wages of $62.50, $37.50 and $18.75, respectively, from that employment. In weeks 1 and 2 of 2003, she earned wages of $50 and $31.25, respectively, from that employment.

The claimant did not report the wages to the department, because a department representative had told her that the pay did not amount to wages for unemployment purposes. This was incorrect. It is true, that pursuant to Wis. Stat. § 108.02(15)(i), certain services performed for an educational institution by a student at that institution are by definition not performed in "employment" and thus cannot be "base period wages" within the meaning of Wis. Stat. § 108.02(4m) for purposes of determining future entitlement to UI benefits. However, it is a separate question whether such services are performed for "wages" within the meaning of Wis. Stat. § 108.02(26). That definition does not require that the services be performed in covered "employment", but simply that the services be performed for an employing unit for pay. Whether or not the employee performed services in "employment," she performed services for an employing unit and received remuneration for such services. Under Wis. Stat. § 108.05(3), her weekly benefit entitlement should thus be reduced due to the wages she earned. See, Acker v. Village of Sturtevant (LIRC, January 7, 2000).

Under the Trade Act, TRA payable to an adversely affected worker for a week of unemployment is required to be reduced by any income that is deductible from unemployment insurance under the disqualifying income provisions of the applicable state law. 19 U.S.C. § 2292(a)(2). Thus, claimant's entitlement to TRA, in the weeks described above when she received wages from her employment, should have been reduced as a result of those wages. Because the claimant did not report the wages to the department, the TRA payments made to the claimant for those weeks were not reduced as they should have been, and she ended up being paid more TRA than she was entitled to. The cumulative overpayment for those five weeks amounted to $43.

Considering what she had actually been paid (as opposed to what she should have been paid), the claimant's basic TRA entitlement of 26 times her weekly rate of $313 was exhausted with payment of $313 for week 9 of 2003 (the week ending March 1, 2003). On that basis, beginning with week 10 of 2003 (the week ending March 8, 2003), the department began paying claimant "additional" TRA payments in the amount of $313/week.

However, if the claimant's wages from employment had been properly accounted for, and she had been paid $43 less in benefits for the weeks described above, she would have had a remaining entitlement to $43 in basic TRA for week 10 of 2003. Under the Trade Act, additional TRA cannot be paid until basic TRA is exhausted and additional TRA and basic TRA cannot be paid for the same week. Thus, since the claimant would have been entitled to $43 in basic TRA for week 10 of 2003, she was not entitled to the $313 in additional TRA that she was in fact paid for that week.

Information about the wages which the claimant had received in weeks 45, 48 and 49 of 2002 and 1 and 2 of 2003 eventually came to the department, and it redetermined her benefit eligibility based on that information.

The department issued an amended determination (2)  on December 24, 2003, concluding that the claimant failed to report work and wages in weeks 45, 48 and 49 of 2002, and weeks 1 and 2 of 2003, as described above, and that as a result the claimant had been overpaid in the amount of $313 in those weeks and in week 10 of 2003.

The claimant filed a timely appeal of this determination. Following a hearing, an ALJ acting as an Appeal Tribunal for the department issued a decision on April 19, 2004. This decision affirmed the determination that the claimant had been overpaid benefits in the amount of $313, but applying Wis. Stat. § 108.22(8)(a), it concluded that the overpayment had been the result of department error and that for that reason the department was required to waive recovery of the overpayment. No timely petition for review was filed from that Appeal Tribunal decision and, by operation of law, it thus became final as of May 11, 2004.

On May 26, 2004, the ALJ issued an amended Appeal Tribunal decision. This amended decision concluded that the $313 overpayment had to be repaid because the overpayment was not caused by any error of the department "and/or" was caused partially or wholly by the claimant, within the meaning of Wis. Stat. § 108.22(8)(a). The amended decision also noted that federal law allows waiver of recovery of overpaid TRA when the overpayment was not the fault of the claimant and recovery would cause extraordinary hardship, and that the claimant could apply for such a waiver by completing a waiver application form which could be obtained from the department.

The claimant timely petitioned for commission review of the amended Appeal Tribunal decision of May 26, 2004, arguing that "department error" occurred when she was misadvised by a department representative that she did not have to report her work-study income as wages. 
 

May 26, 2004 Amended Appeal Tribunal Decision --

The petition for review presents the issue of whether the amended Appeal Tribunal decision of May 26, 2004 was correct. However, the commission also notes a threshold issue as to whether the ALJ even had the authority to issue that decision. For the following reasons, the commission concludes that she did not.

The scope of an ALJ's authority to amend Appeal Tribunal decisions after they have been issued is set out in Wis. Stat. § 108.09(4)(f), which provides:

(f) Postdecision changes. 1. Except as provided in par. (e) 3., within 21 days after its decision was mailed to the parties the appeal tribunal may on its own motion amend or set aside its decision and may thereafter make new findings and issue a decision on the basis of evidence previously submitted in such case, or the same or another appeal tribunal may make new findings and issue a decision after taking additional testimony.

2. Unless a party has filed a timely petition for review of the appeal tribunal decision by the commission, the appeal tribunal may set aside or amend an appeal tribunal decision, or portion thereof, at any time if the appeal tribunal finds that:

a. A technical or clerical mistake has occurred; or

b. The benefits paid or payable to a claimant have been affected by wages earned by the claimant which have not been paid, and the appeal tribunal is provided with notice from the appropriate state or federal court or agency that a wage claim for those wages will not be paid in whole or in part.

3. Unless a party has filed a timely petition for review of the appeal tribunal decision by the commission, the appeal tribunal may, within two years after the date of the decision, reopen its decision if it has reason to believe that a party offered false evidence or a witness gave false testimony on an issue material to its decision. Thereafter, and after receiving additional evidence or taking additional testimony, the same or another appeal tribunal may set aside its original decision, make new findings and issue a decision.

In this case, the amended Appeal Tribunal decision was not issued until more than 21 days had elapsed after the original Appeal Tribunal decision was issued; therefore, the ALJ could not rely on subsection (f)1. for the authority to amend the original decision. There is also nothing in the record even hinting at the necessary factual predicates for the application of subsection (f)2.b. (relating to benefits being affected by wages earned but not paid and a wage claim having been filed) or subsection (f)3. (relating to false evidence or testimony by a party or witness). Thus, only the provisions of subsection (f)2.a., could potentially serve as a basis for the ALJ to amend the Appeal Tribunal decision.

Subsection (f) provides that an ALJ may amend an Appeal Tribunal decision on grounds of "a technical or clerical mistake". The "technical or clerical mistake" standard in § 108.09(4)(f)2.a. is clearly different from, and clearly narrower than, the "subsequent information [or] mistake, including an error of law" standard in § 108.09(2)(c) which applies to the department's authority to set aside initial determinations after the appeal period has run. The "technical or clerical mistake" standard in § 108.09(4)(f)2.a. is also narrower than the "mistake or newly discovered evidence" standard in § 108.09(6)(c) which applies to the commission's authority to set aside final decisions. See, Rouse v. Holiday Inn of Rhinelander (LIRC, June 7, 1999). The Rouse decision provides an example of what a "technical or clerical error" is: in that case, department correspondence was erroneously sent to the wrong employing unit, and a decision ended up listing the wrong employer.

Consideration of the example provided by the Rouse decision, and of the distinct difference between the § 108.09(4)(f)2.a. "technical or clerical error" standard and the standards found in § 108.09(2)(c) and § 108.09(6)(c), leads the commission to conclude that the error which the ALJ sought to correct in this case, was not one within the intended scope of § 108.09(4)(f)2.a. In the original Appeal Tribunal decision, the ALJ had decided the question of whether the overpayment of TRA could be waived by applying the provisions of Wis. Stat. § 108.22(8), rather than the provisions of the Trade Act. This was neither a "technical" nor a "clerical" error. This was, as is described below, a mistake of law. For this reason, § 108.09(4)(f)2.a did not provide the ALJ with authority to amend her original decision after the 21-day appeal period had run.

Although it could be argued that it is anomalous to construe § 108.09(4)(f)2.a. in a fashion that allows ALJs to correct technical and clerical errors while not allowing them to correct significant legal errors, such an argument is ultimately unpersuasive, for several reasons. Decisions of ALJs are appealable by parties and also by the department. The interests of the parties, and the interest of the department in seeing to the proper administration of the law, will in most instances serve to insure that significant legal errors are not left unexamined. Also, the need for finality that underlies the 21-day time limit for filing a petition for commission review of an appeal tribunal decision militates in favor of this limit on the authority of ALJs to change their decisions.

Because the ALJ did not have the authority to issue the May 26, 2004 Amended Appeal Tribunal Decision, the commission sets that decision aside. That leaves the original Appeal Tribunal decision of April 19, 2004, in effect. As noted above, no petition for review was filed from that original Appeal Tribunal Decision, and it is thus final.  
 

April 19, 2004 Appeal Tribunal Decision -- TRA overpayment issue --

Pursuant to Wis. Stat. § 108.09(6)(c), the commission has the authority, on its own motion and for reasons it deems sufficient, to set aside any final appeal tribunal decision within two years from the date thereof on grounds of mistake or newly discovered evidence. The commission exercises that authority here on grounds of mistake, concluding for the reasons described below that the April 19, 2004 Appeal Tribunal decision was mistaken as a matter of law in purporting to waive recovery of a TRA overpayment based on provisions of the Wisconsin UI Act.

It was not disputed that the claimant was overpaid TRA because she did not report earnings for certain weeks of employment which would, had they been reported, have reduced her benefit entitlement, as described above. The important issue for decision was whether recovery of the overpaid benefits could be waived.

The Appeal Tribunal erred in relying on the provisions of Wis. Stat. § 108.22(8) concerning recovery of overpayments. This case concerns overpayment of TRA payments under the Trade Act, and the provisions of Wis. Stat. § 108.22(8), including the notion of "department error", have no applicability at all to such overpayments or the question of waiver of such overpayments.

TRA payments are not subject to the provisions of the Wisconsin UI Act concerning waivers of recovery of unemployment insurance overpayments based on "department error". Rather, they are subject to the provisions of the Trade Act, and its regulations, which differ significantly from those in the UI Act.

Jennifer L. Menke (LIRC, Jan. 11, 2005). See also, J. C. Munoz (LIRC, Aug. 24, 2004). Issues arising from overpayment of TRA under the Trade Act, and recovery or waiver of recovery of such overpayments, are governed exclusively by provisions in the Trade Act. Specifically, 19 U.S.C. § 2315(a) provides that a state agency may waive recovery of an overpayment of Trade Act benefits if the agency

determines, in accordance with guidelines prescribed by the Secretary, that--

(A) the payment was made without fault on the part of such individual, and

(B) requiring such repayment would be contrary to equity and good conscience.

The "guidelines prescribed by the Secretary" referred to here are regulations found in 20 C.F.R. § 617.55. See the NOTE, infra at p. 8.

The fact that (as appears to have occurred here) an overpayment resulted because a claimant acted in good faith on the basis of erroneous information provided by a state agency, would be relevant to a determination of whether the "made without fault on the part of [the] individual" provision is met. However, the concept of "department error" as it exists in § 108.22(8) does not appear in any form in the applicable federal test. Furthermore, such considerations would not be relevant to a determination of whether the "contrary to equity and good conscience" provision is met. That provision looks solely to the impact that requiring recovery of the overpayment will cause, and specifically to whether it will cause "extraordinary and lasting financial hardship".

In addition, unlike the system created by Wisconsin law in which decision makers are expected to address and resolve the relevant questions about whether recovery of an overpayment should be waived as a part of any decision which creates such an overpayment, under the Trade Act the question of whether recovery of an overpayment should be waived is to be taken up subsequently and separately, and then only in response to a formal application by a claimant for waiver of an overpayment after it has been determined. 20 C.F.R. § 617.55(a)(2)(ii)(C)(3) provides:

Determinations granting or denying waivers of overpayments shall be made only on request for a waiver determination. Such request shall be made on a form which shall be furnished to the person or individual by the State agency. Notices of determination of overpayments shall include an accurate description of the waiver provisions of paragraph (a) of this section

Therefore, this decision will not address the question of whether the overpayment determined here should be waived. If the claimant wishes to pursue that issue, she should obtain an application for a waiver from the department, as described in the NOTE appended to this decision. 
 

Conclusion --

The commission finds that in weeks 45, 48 and 49 of 2003 and weeks 1 and 2 of 2004, the claimant earned wages in the amounts of $62.50, $37.50, $18.75, $50, and $31.25, respectively, resulting in respective weekly basic TRA benefit payment entitlements for those weeks of $291, $307, $313, $299, and $312, within the meaning of and pursuant to Wis. Stat. § § 108.02(26) and 108.05(3) and 19 U.S.C. § 2292(a)(2).

The commission further finds that for week 10 of 2003 the claimant had a remaining benefit entitlement of $43 in basic TRA, and that as a result she had no entitlement to additional TRA payments for that week.

The commission further finds that the claimant received TRA benefits in the amount of $22 for week 45 of 2002, $6 for week 48 of 2002, $14 for week 1 of 2003, $1 for week 2 of 2003, and $270 for week 10 of 2003, in the total amount of $313, for which she was not eligible and to which she was not entitled, within the meaning of and pursuant to 19 U.S.C. § 2315(a)(1), and that the claimant was required to repay that amount to the department.

DECISION

The May 26, 2004 Amended Appeal Tribunal decision in this matter is set aside, pursuant to the commission's authority in Wis. Stat. § 108.09(6)(d).

The April 19, 2004 Appeal Tribunal decision in this matter is set aside, on grounds of mistake, pursuant to the commission's authority in Wis. Stat. § 108.09(6)(c).

The December 24, 2003 Initial Determination in this matter is modified to delete therefrom the last paragraph (beginning with, "Section 108.22(c) provides that recovery of erroneously paid benefits be waived . . ."), and as modified is affirmed and will remain in effect. Accordingly, in weeks 45 and 48 of 2003 and 1, 2 and 10 of 2004 the claimant was ineligible for weekly TRA benefit payments to the extent found in that determination and described above, and the claimant was required to repay the sum of $313 to the department. Department records indicate that this overpayment has already been recovered by way of offset against subsequent benefit entitlements and that there is no remaining overpayment balance.

Dated and mailed February 28, 2005
kowalla . trr : 110 : 4  PC 715  TRA

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

 

NOTE: Federal law allows a waiver of an overpayment of Trade Readjustment Allowances under certain circumstances (described below). To obtain a determination on whether such a waiver can be granted, the claimant must file an application for a waiver. An application for waiver form can be obtained by sending a request to Unemployment Compensation Division, TRA Unit, P.O. Box 7965, Madison, WI, 53707.

20 C.F.R. § 617.55, governing waiver of an overpayments of TRA, provides as follows:

§ 617.55 Overpayments; penalties for fraud.

(a) Determination and repayment. (1) If a State agency or a court of competent jurisdiction determines that any person or individual has received any payment under this part 617 to which the person or individual was not entitled, including a payment referred to in paragraph (b) or paragraph (c) of this section, such person or individual shall be liable to repay such amount to the State agency, and the State agency shall recover any such overpayment in accordance with the provisions of this part 617; except that the State agency may waive the recovery of any such overpayment if the State agency determines, in accordance with the guidelines prescribed in paragraph (a)(2) of this section, that:

(1)(i) The payment was made without fault on the part of such person or individual; and

     (ii) Requiring such repayment would be contrary to equity and good conscience.

(2)(i)(A) In determining whether fault exists for purposes of paragraph (a)(1)(i) of this section, the following factors shall be considered:

(1) Whether a material statement or representation was made by the person or individual in connection with the application for TAA that resulted in the overpayment, and whether the person or individual knew or should have known that the statement or representation was inaccurate.

(2) Whether the person or individual failed or caused another to fail to disclose a material fact, in connection with an application for TAA that resulted in the overpayment, and whether the person or individual knew or should have known that the fact was material.

(3) Whether the person or individual knew or could have been expected to know, that the person or individual was not entitled to the TAA payment.

(4) Whether, for any other reason, the overpayment resulted directly or indirectly, and partially or totally, from any act or omission of the person or individual or of which the person or individual had knowledge, and which was erroneous or inaccurate or otherwise wrong.

(5) Whether there has been a determination of fraud under paragraph (b) of this section or section 243 of the Act.

(B) An affirmative finding on any one of the factors in paragraphs (a)(2)(i)(A) of this section precludes waiver of overpayment recovery.

   (ii)(A) In determining whether equity and good conscience exists for purposes of paragraph (a)(1)(ii) of this section, the following factors shall be considered:

(1) Whether the overpayment was the result of a decision on appeal, whether the State agency had given notice to the person or individual that the case has been appealed and that the person or individual may be required to repay the overpayment in the event of a reversal on appeal, and whether recovery of the overpayment will not cause extraordinary and lasting financial hardship to the person or individual.

(2) Whether recovery of the overpayment will not cause extraordinary financial hardship to the person or individual, and there has been no affirmative finding under paragraph (a)(2)(ii)(A) of this section with respect to such person or individual and such overpayment.

(B) An affirmative finding on either of the foregoing factors in paragraphs (a)(2)(ii)(A) of this section precludes waiver of overpayment recovery.

(C)(1) For the purpose of paragraph (a)(2)(ii) of this section, an extraordinary financial hardship shall exist if recovery of the overpayment would result directly in the person's or individual's loss of or inability to obtain minimal necessities of food, medicine, and shelter for a substantial period of time; and an extraordinary and lasting financial hardship shall be extraordinary as described above and may be expected to endure for the foreseeable future.

    (2) In applying this test in the case of attempted recovery by repayment, a substantial period of time shall be 30 days, and the foreseeable future shall be at least three months. In applying this test in the case of proposed recoupment from other benefits, a substantial period of time and the foreseeable future shall be the longest potential period of benefit entitlement as seen at the time of the request for a waiver determination. In making these determinations, the State agency shall take into account all potential income of the person or individual and the person's or individual's firm, organization, or family and all cash resources available or potentially available to the person or individual and the person's or individual's firm, organization, or family in the time period being considered.



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Footnotes:

(1)( Back ) Trade Readjustment Allowances ("TRA") are weekly amounts payable under the Trade Act to adversely affected workers. All adversely affected workers who are otherwise eligible have an initial entitlement to an amount of TRA payments equal to 26 times their applicable state UI benefit rate. This is referred to as "basic TRA". In addition, adversely affected workers who have exhausted their entitlement to "basic TRA" may, at that point, become eligible for a further entitlement to TRA payments, but only if they are actually enrolled in training under the Trade Act. This further entitlement is referred to as "additional TRA". See, 19 U.S.C. § 2293(a)(1), (3).

(2)( Back ) According to this amended determination, the department issued an earlier determination in the matter on November 19, 2003, which the December 24, 2003 determination amended. However, the contents of the November 19, 2003 determination are not reflected in the file which was forwarded to the commission by the department with the petition for review.


uploaded 2005/03/01