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

CHARLES G. HALE, Claimant

UNEMPLOYMENT INSURANCE / TRADE ACT DECISION
Hearing No. 05403511GB


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 filed claims for and received Wisconsin unemployment insurance (UI) benefits for a number of weeks in 2004. He last filed a claim for UI benefits for week 51 of 2004 (the week ending December 18, 2004). Beginning with the following week, week 52 of 2004 (the week ending December 25, 2004), the claimant filed claims for and received Trade Readjustment Allowances (TRA) benefits under the federal Trade Act.

During the time that he was claiming these benefits, the claimant was working part-time and earning wages from such employment, from a number of employers. The department eventually became aware of the discrepancies between what the claimant had reported he had earned in these weekly claims and what his employers had reported he had been paid, and it conducted an investigation. On September 2, 2005 the department issued two related determinations.

One of the determinations found that the claimant concealed work performed and wages earned in weeks 52 of 2004 and weeks 2-3, 5, 8-12, and 14-16 of 2005, for which weeks TRA benefits were paid to the claimant, that the claimant was for this reason ineligible for any further benefits under the Trade Act, and that the decision resulted in an overpayment of $8,442 which the claimant was required to repay. This matter, subsequently assigned Hrg. No. 05403510GB, will be referred to herein as the "eligibility/overpayment" matter.

The other determination found that the claimant had concealed work performed and wages earned in weeks 25-27, 31-34, 36-46, and 49-52 of 2004 and weeks 2-3, 5, 8-12, and 14-16 of 2005. (1)    This determination stated that its effect was that the claimant was required to forfeit $5,264 of unemployment compensation benefits that become payable during the six year period ending August 6, 2011. This matter, subsequently assigned Hrg. No. 05403611GB, will be referred to herein as the "concealment/forfeiture" matter.

The claimant filed timely appeals from both of these determinations. Pursuant to notice, an administrative law judge acting as an Appeal Tribunal for the department conducted a hearing on these appeals on January 23, 2006. The administrative law judge subsequently issued two Appeal Tribunal Decisions, affirming the department's determinations. The claimant filed timely petitions for commission review of these Appeal Tribunal Decisions.

In this decision, the commission addresses the petition for review of the decision in Hrg. No. 05403511GB, the "concealment/forfeiture" decision.  (2) 
 

Discussion -- The claimant did not dispute the evidence in the record concerning the weeks in which he filed claims, the amounts he reported in his claims as having earned, and the amounts he in fact earned in those weeks. That evidence establishes, and it is hereby found, that the claimant filed UI claims reporting less in earnings than he had actually earned for the week, for weeks 25-27, 31-34, 36-46 and 49-50 of 2004, (3)   and that he filed TRA claims reporting less in earnings than he had actually earned for the week, for weeks 52 of 2004 and 2-3, 8-12, and 14-16 of 2005. (4)   In several of these weeks the claimant reported no earnings, and in the other weeks he reported weekly earnings of $30 or $45, when in all such weeks he had in fact earned significantly more than he reported.

The next issue for decision involves the consequences of the claimant's inaccurate reporting of his earnings. For the reasons discussed below in the attached Memorandum Opinion, infra at p. 7, it is necessary to address this issue separately with respect to the weeks during which UI benefits were being claimed and those in which Trade Act benefits were being claimed.
 

Weeks during which UI benefits were being claimed -- Because the claimant was claiming Wisconsin UI benefits when he filed his claims for weeks 25-27, 31-34, 36-46 and 49-50 of 2004, the law which applies with respect to those claims is Wis. Stat. § 108.04(11)(a), which provides in relevant part:

(11) Fraudulent claims. (a) If a claimant, in filing his or her application for benefits or claim for any week, conceals any part of his or her wages earned in or paid or payable for that week, or conceals his or her refusal within that week of a job offer or any other material fact relating to his or her eligibility for benefits, so much of any benefit payment as was paid because of such concealment shall be recovered by the department as an overpayment.

(b) The department shall also require any claimant to forfeit for an act of concealment the following amount of benefits:

1. Not less than 25% of nor more than 4 times the claimant's benefit rate under s. 108.05 (1) for the week for which the claim is made for any single act of concealment which results in no overpayment or in an overpayment of less than 50% of that benefit rate; or

2. Not less than one nor more than 4 times the claimant's benefit rate under s. 108.05 (1) for the week for which the claim is made for any single act of concealment which results in an overpayment of 50% or more of that benefit rate.

The claimant's explanation, that he did not report the correct amount of his weekly earnings because he did not know what he earned in each week, was not believable. The question concerning wages that the claimant was asked when he filed his weekly claims was simple and straightforward. The claimant knew his hourly wage rate in the part-time employment he was engaging in while claiming benefits. He also knew the number of hours that he worked in each week. He could have easily come up with a much more realistic estimate of his earnings in each week. He did not present a valid explanation for his failure to do so.

For the foregoing reasons, the commission concludes that the claimant's inaccurate reporting of his earnings in filing his UI benefit claims for weeks 25-27, 31-34, 36-46 and 49-50 of 2004, amounted to concealment within the meaning of Wis. Stat. § 108.04(11)(a). The claimant was thus appropriately ordered to pay a forfeiture pursuant to § 108.04(11)(b).

The next issue for decision, is whether the amount of the forfeiture ordered in the determination and affirmed by the ALJ, was appropriate. The commission concludes that it was not.

The department's determination did not include any explanation of how the amount of the forfeiture was arrived at. The ALJ's decision stated that "[t]he department followed its guidelines in assessing the forfeiture." There is in fact no evidence in the hearing record which indicates anything about how the amount of the forfeiture was arrived at.  (5)   However, the commission notes that the amount of the forfeiture, $5,264, is exactly 16 times the claimant's weekly benefit rate of $329. The commission infers that the department's determination reflected a decision that an appropriate forfeiture would be 50% of the claimant's weekly benefit rate for each week of concealment, applied to 32 weeks covering both the period during which the Wisconsin UI benefits were being claimed and the period during which federal Trade Act benefits were being claimed. (6)

The decision that an appropriate forfeiture would be 50% of the claimant's weekly benefit rate for each week of concealment was reasonable, and the commission adopts it. However, weeks in which the claimant engaged in concealment while filing claims under the federal Trade Act, should not have been counted among the weeks used to calculate the total amount of the forfeiture. The provision of the Wisconsin UI Act concerning concealment of material facts in filing claims, applies only to concealment in filing for benefits under that Act. Taking into account the erroneous inclusion of week 51 of 2004, see note 3, supra at p. 2, the record here supports the conclusion that the claimant engaged in separate acts of concealment in filing for benefits under the Wisconsin UI Act, in only 20 weeks, those being weeks 25-27, 31-34, 36-46, and 49-50 of 2004. On that basis, and applying a forfeiture equal to 50% of the claimant's weekly benefit rate for each week in which there was an act of concealment while claiming UI benefits, the total appropriate forfeiture is $3,290. 
 

Weeks during which Trade Act benefits were being claimed -- Because the claimant was claiming benefits under the federal Trade Act when he filed his claims for week 52 of 2004 and weeks 2-3, 8-12, and 14-16 of 2005, the law which applies with respect to those claims is 19 U.S.C. § 2315, which provides in material part as follows:

§ 2315. FRAUD AND RECOVERY OF OVERPAYMENTS
. . .
(b) False representation or nondisclosure of material fact. If a cooperating State agency, the Secretary, or a court of competent jurisdiction determines that an individual--

(1) knowingly has made, or caused another to make, a false statement or representation of a material fact, or

(2) knowingly has failed, or caused another to fail, to disclose a material fact,

and as a result of such false statement or representation, or of such nondisclosure, such individual has received any payment under this chapter [19 USCS § § 2271 et seq.] to which the individual was not entitled, such individual shall, in addition to any other penalty provided by law, be ineligible for any further payments under this chapter [19 USCS § § 2271 et seq.].

The claimant's conduct of reporting less in earnings than he earned in those weeks, was knowing, and it related to facts which were material to his claim and to the amount of benefits he would be entitled to. His under-reporting of his wages constituted both the making of a false statement, and the failure to disclose a material fact. Finally, as a result of this conduct, the claimant received payments under the Trade Act to which he was not entitled.

For the foregoing reasons, the commission concludes that the claimant's inaccurate reporting of his earnings in filing his Trade Act benefit claims for weeks 52 of 2004 and weeks 2-3, 8-12, and 14-16 of 2005, amounted to the knowing making of a false statement of a material fact and a knowing failure to disclose a material fact, within the meaning of 19 U.S.C. § 2315(b).

The next issue for decision concerns the consequences of this conduct.

Under the relevant provision of the Trade Act, if a claimant knowingly makes a false statement of a material fact or fails to disclose a material fact and as a result receives payments to which they are not entitled, the consequence is that they are ineligible for any further payments under the Act. Thus, although the claimant's inaccurate reporting extended over a number of weeks of Trade Act claims, the consequences of his conduct are effectively determined and fixed by the conclusion in that respect as to the first week in which this occurred, week 52 of 2004. Because in claiming for this week the claimant knowingly made a false statement of a material fact and failed to disclose a material fact and as a result received a payment he was not entitled to, he became ineligible at that point for any further payments under the Trade Act. Thus, and entirely apart from the effect which his actual earnings in subsequent weeks would otherwise have had on his benefit rate for those weeks if it had been reported, the claimant was entirely ineligible for any benefits under the Trade Act for those subsequent weeks. See, e.g., Cornell M. Stroik (LIRC, March 22, 2004).

The matters of the specific amount of the overpayment of Trade Act benefits resulting from the claimant's ineligibility during these weeks, and of whether repayment of the overpayment is required or may be waived, are addressed in the decision in the eligibility/overpayment matter, Hrg. No. 05403510GB.

The commission therefore finds that in claiming UI benefits for weeks 25-27, 31-34, 36-46, and 49-50 of 2004, the claimant concealed from the department work performed and wages earned or paid or payable for those weeks, within the meaning of Wis. Stat. § 108.04(11)(a), and that for this reason he shall forfeit $3,290 in unemployment benefits that become payable by August 6, 2011, within the meaning of Wis. Stat. § 108.04(11)(b).

The commission further finds that in claiming Trade Act benefits for weeks 52 of 2004 and weeks 2-3, 8-12, and 14-16 of 2005, the claimant knowingly made a false statement or representation of a material fact and knowingly failed to disclose a material fact and as a result received payments under the Trade Act to which he was not entitled, within the meaning of 19 USC § 2315(b), and that for this reason he is ineligible, as of the first such week, week 52 of 2004, for any further benefits under the Trade Act.

DECISION

The decision of the administrative law judge is modified to conform with the foregoing and, as modified, is affirmed. Accordingly,

(1) The claimant shall forfeit $3,290 in unemployment benefits that become payable by August 6, 2011, and

(2) The claimant is ineligible as of week 52 of 2004 for any further benefits under the federal Trade Act. Issues relating to the overpayment resulting from this ineligibility are addressed in the decision in Hrg. No. 05403510GB.

Dated and mailed April 19, 2006
halecha . urr : 110 : 8  TRA  BR 335

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

MEMORANDUM OPINION

This case involves weeks in which the claimant was claiming unemployment insurance benefits under Wisconsin's Unemployment Insurance Act, and weeks in which he was claiming benefits under the federal Trade Act. These two laws have separate and substantively different provisions concerning both what constitutes concealment in making benefit claims, and what the consequences of engaging in such concealment are. However, the department's determination, and the Appeal Tribunal Decision which affirmed that determination, failed to take this into account, and instead simply accumulated all of the weeks together and applied Wisconsin law to them. This was error. Because of the differences in the law which applies, issues concerning concealment in making claims under Wisconsin's UI Act, must be treated separately from issues concerning concealment in claiming under the Trade Act.

The provision of the Wisconsin UI Act which applies to concealment of material facts in filing claims, Wis. Stat. § 108.04(11), "Fraudulent Claims", applies by its terms to a claimant who engages in concealment "in filing his or her application for benefits or claim for any week". The term "benefits" is defined by the Wisconsin UI Act to mean the money allowance payable to an employee in compensation for the employee's wage losses due to unemployment "as provided in this chapter." Wis. Stat. § 108.02(6). However, while persons claiming benefits under the Trade Act do so through the UI Division, and generally pursuant to the same procedures as are used to handle UI claims, this does not necessarily mean that every provision of state law applicable to UI claims applies to benefit claims under the Trade Act. That Act provides, that the availability and disqualification provisions of state UI law apply to claimants under the Trade Act, "[e]xcept where inconsistent with the provisions of this chapter." 19 USCS § 2294. Thus, where a different procedure or standard is expressly provided for under federal law for Trade Act benefit claims, it clearly takes precedence. The Trade Act has a specific provision governing concealment of material facts in the making of claims for benefits under that Act, and the Department of Labor has also promulgated regulations concerning this. For these reason, Wisconsin's "Fraudulent Claims" provision, § 108.04(11), must be construed to apply only to concealment in the making of claims for benefits under Wisconsin's UI Act, and not to concealment in the making of claims for benefits under the Trade Act.

 

NOTE: Because this case (the "concealment/forfeiture" matter) was initially processed by the department in a single determination and thus ended up as a single Appeal Tribunal Decision, the commission has included its resolutions of the issues presented by the case in a single decision. It wishes to suggest to the department, however, that in the future it would be preferable for it to use separate determinations for UI and Trade Act issues in cases presenting situations such as this.

As is noted herein and in the commission's companion decision in Hrg. No. 05403511GB, the Wisconsin UI Act and the federal Trade Act have significantly different provisions applicable to issues of concealment or misstatements of material facts in filing benefit claims, what the consequences of such concealment or misstatement are, what standards are applicable to determining whether repayment of erroneously paid benefits may be waived, and what procedures apply to making such overpayment waiver determinations. In a case such as this, involving some weeks of Wisconsin UI Act claims and some weeks of federal Trade Act claims, attempting to cover all of the weeks in one determination may increase the likelihood of an erroneous application of one Act to claims filed under the other, and otherwise complicates the process of analyzing and resolving the issues presented. The commission believes that for this reason, the best practice would be to avoid "mixing" weeks of UI claims and weeks of Trade Act claims in the same determination.


[ Search UC Decisions ] - [ UC Digest - Main Index ] - [ UC Legal Resources ] - [ LIRC Home Page ]


Footnotes:

(1)( Back ) The determination erroneously described one week as the week ending March 16, 2005, when in fact that week ended on March 19, 2005. However, it is evident from context that the intended reference was to the week ending March 19, 2005, which was week 12 of 2005.

(2)( Back ) The commission has this day issued a separate decision addressing the petition for review in Hrg. No. 05403510GB, the "eligibility/overpayment" decision.

(3)( Back ) The department's determination, and the Appeal Tribunal Decision affirming it, also included week 51 of 2004 (the week ending December 18, 2004). However, Exs. 1 and 2 show that the claimant reported $184 in earnings but had actual earnings of only $181.83 for that week.

(4)( Back ) The department's determination, and the Appeal Tribunal Decision affirming it, also included week 5 of 2005 (the week ending January 29, 2005). However, Exs. 1 and 2 show that the claimant reported $28 in earnings but had actual earnings of only $20.96 for that week.

(5)( Back ) It appears that the ALJ's finding in this respect may have been based on consideration of documents in the department's file which were not marked or received as evidence at hearing. These documents suggest that the department deputy who issued the initial determination had used some type of department worksheet for arriving at a forfeiture based on consideration of circumstances including the number of weeks of concealment involved.

(6)( Back ) The commission recognizes that there is a slight discrepancy here, in that a total of 33 separate weeks were identified in the determination. However, documents in the hearing office file in this case reflect a number of errors in the identification of weeks being counted for purposes of calculating the forfeiture assessment, consistent with the conclusion that the figure of 32 weeks was used in that calculation.

 


uploaded 2006/04/24