STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126
http://dwd.wisconsin.gov/lirc/

NIKKI L WALLENKAMP, Employee

ARBY'S RESTAURANTS, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 13607281MW
and 13607282MW


On October 4, 2013, an administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development (department) issued two appeal tribunal decisions in this matter.

The employee filed a timely petition for commission review. The commission considered the petition, reviewed the evidence submitted to the ALJ, and issued a decision on January 28, 2014, reversing the appeal tribunal decisions.

The department filed a Request for Reconsideration on February 25, 2014. Pursuant to its authority under Wis. Stat. § 108.09(6)(c), the commission set aside its January 28, 2014, decision on the grounds of mistake,(1) pending further consideration.

The commission now makes the following:


FINDINGS OF FACT AND CONCLUSIONS OF LAW

A de novo hearing before an ALJ sitting as an appeal tribunal for the department was held on September 30, 2013. The employee appeared in person. One employer, TRH Restaurants, Inc., d/b/a Rocky Rococo's, appeared by telephone. During the parties' testimony, several documents were marked by the ALJ as Exhibits 1 through 8, which were later received into evidence. No one appeared at the hearing to testify on behalf of the department.

Facts Adduced at Hearing

The employee had been filing for unemployment insurance benefits since 2011. She began working for Arby's in April 2011 and testified that she "called in every week and reported [her] wages." The employee last worked for Arby's on January 16, 2013 (week 3).

In weeks 44 of 2012 through 3 of 2013, the employee worked for Arby's and earned wages. She was paid by Arby's for unused vacation time on February 1, 2013
(week 5). Her hours, wages, and vacation pay from Arby's are reflected in Exhibit 3 and are set forth in the table below.

The employee also worked for TRH Restaurants, Inc. in weeks 47 and 48 of 2012. She quit in week 48 of 2012. Her hours and wages from that employer are reflected in Exhibit 1 and are set forth in the table below.

The employee's wages and vacation pay for the weeks at issue are as follows:

Week

Hours worked

Wages earned

44/12

25 hrs, 26 min.

$192.92

45/12

26 hrs, 42 min.

$202.92

46/12

30 hrs, 26 min.

$231.28

47/12

33 hrs, 7 min. (Arby’s)

17 hrs, 18 min. (TRH)

$251.68

$125.43

48/12

33 hrs, 4 min. (Arby’s)

10 hrs, 6 min. (TRH)

$251.31

$  73.23

49/12

27 hrs, 34 min.

$209.51

50/12

38 hrs, 9 min.

$289.94

51/12

36 hrs, 35 min.

$269.92

52/12

36 hrs, 35 min.

$278.03

1/13

20 hrs, 52 min.

$158.59

2/13

34 hrs, 46 min.

$264.22

3/13

13 hrs, 39 min.

$103.74

4/13

0

$    0.00

5/13

16 hrs, 12 min. (vacation)

$123.12

Exhibit 5 shows that the employee filed weekly claim certifications for unemployment insurance benefits for weeks 44 of 2012 through 4 of 2013. When filing claims for those weeks, the employee responded "No" to Question No. 4, which asked "During the week, did you work or did you receive or will you receive sick pay, bonus pay, or commission?" The employee had, in fact, worked in all of those weeks, with the exception of week 4 of 2013. In weeks 47 and 48 of 2012, the employee worked for two employers.

Exhibit 5 also shows that the employee did not report quitting her employment with TRH Restaurants, Inc. in week 48 of 2012.

Exhibit 4 shows that, on September 5 and October 24, 2012, the department mailed a Claim Confirmation, FORM TYPE 10148, to the employee. Exhibit 4 contains a sample Form UCB-10148, titled "CLAIM CONFIRMATION AND INSTRUCTIONS." The sample explains that, "if this is a new application," the packet includes a handbook (UCB-10). Exhibit 2 is a copy of a Handbook for Claimants with a revision date of October 2012. Prior to week 43 of 2012, the week ending October 26, 2012, Question No. 4 on the weekly claim certification was simply "Did you work?" Beginning in week 43 of 2012, the calendar week ending October 27, 2012, and as described in Exhibit 2, Question No. 4 was modified to "During the week, did you work or did you receive or will you receive sick pay, bonus pay or commission?"

The ALJ stated that the employee was in a continuing claim status as of week 44 of 2012.(2) Therefore, it is not clear from the record whether the employee received the handbook revised in October 2012.

Exhibit 6 shows that, on March 13, 2013, the department sent three letters to the employee, notifying her that it had received information about possible errors with her claims. The employee was to have had an interview on March 27, 2013, with an adjudicator about her failure to report wages and vacation pay, a quit from TRH Restaurants, Inc., and a discharge from Arby's. The employee testified that the adjudicator never called her at the scheduled time. Exhibit 7 contains two statements prepared by the adjudicator on March 27, 2013. The first shows that the adjudicator called the employee at 8:31 a.m. and gave her a deadline to respond to the fraud allegations by 9:00 a.m. that same day. The second statement shows that the adjudicator spoke with the employee on March 27, 2013, concerning week 44 of 2013, but the content does not pertain to that week or to a concealment inquiry.

Exhibit 8 is a blank copy of a UCB-37 Notice of Benefit Overpayment. The employee denied ever having received such a document. It is not known to whom it would have been sent, where it would have been sent, or when it would have been sent. The employee did, however, admit that she had an overpayment in the past of which the department had given her prompt notice. She repaid the overpayment through automatic deductions from her benefits. The employee did not understand why the department did not inform her sooner about the problems with her claims beginning in week 44 of 2012.

The ALJ asked the employee why she answered "No" to Question No. 4 on her weekly claim certifications, which, the ALJ stated, had asked "Did you work or will you receive sick pay, vacation pay (sic), or commission?" The employee explained that she never claimed vacation pay as she earned it, only when she was terminated from Arby's and told her manager to put her vacation hours on her last check. The employee stated, "I guess I was confused on that."

The ALJ then explained that she was asking why the employee, when filing for weekly benefits, said in response to Question No. 4 that she did not work. The employee was confused. She believed that she had reported her work and wages on her claim certifications. When shown Exhibit 5, the employee agreed that it shows that she responded "No" to Question No. 4, which actually asked "During the week, did you work or did you or will you receive sick pay, bonus pay, or commission?" The employee's answers did not make sense to her, because she had received a check from her job for those weeks and could not think of any reason why she would not have reported working. Again, the ALJ asked the employee why she answered "No" to Question No. 4. The employee stated, "Apparently, I thought they were talking about this bonus, or the holiday - not the holiday pay - or the vacation pay or sick pay. I don't understand why I would have put that. That does not make any sense at all." The employee speculated that she may not have "listened to the question correctly."

The employee had filed for unemployment insurance benefits in 2011 and 2012. The "overnight report"(3) shows that the employee had many overpayments since she started working for Arby's in 2011. The employee reported her gross wages weekly, but the employer often reported that the employee missed work that was available to her. Additional wages were imputed to the employee for time missed due to tardiness or leaving work early. The department routinely made the necessary adjustments and recouped the small overpayments from the employee's benefits. The employee was not alleged to have defrauded the department in 2011 or in the first nine months of 2012 by failing to report that she missed work available.

For the weeks at issue, the employee stated that she reported her wages to the department every week when she called in, unless she "answered the question wrong and that's why they never asked [her] for [her] hours or [her] rate of pay." She understood that she needed to report that she worked and earned wages. The employee explained that "they" stopped asking her for her hourly wage and hours worked. She speculated that her answers to Question No. 4 were the same every week beginning in week 44 of 2012 because she used the quick claim process and entered a confirmation number every week. By entering a confirmation number, she was reporting that her answers to the questions asked on the claim certification were the same as the week prior.(4)

The employee purposely did not report to the department that she worked for TRH Restaurants, Inc., or that she quit that employment in week 48 of 2012, because she was not claiming "against" that employer. The employee explained that she "never tried to get unemployment from them." She was only claiming "against" Arby's and not from anybody else. The employee explained that it was the same thing that happened in the preceding year. She had worked for Sbarro for three weeks and "never claimed them." So, when the employee was asked by the automated system whether she had quit a job, she responded "No" concerning Sbarro and, later, concerning TRH Restaurants, Inc.

The employee's claims history, as reflected in the "overnight report," reveals that the employee had worked for Sbarro and had quit that employment. The department did not issue determinations regarding the employee's work for, and separation from, Sbarro, however. The issues were "washed out" in 2012.

When the ALJ explained, for a second time, that a claimant does not choose which employers will be liable for their unemployment benefits and that the questions asked on the weekly claim certifications apply to all employers for which the employee is working, the employee responded, "How, when I never claimed them? That doesn't make sense to me." The employee then informed the ALJ that she is "LD"(5) and "a little slow." The employee was not asked to explain what she meant, nor was the employee asked any questions about her educational level or history.

The employee testified that she "did not intend to get something from unemployment that [she] was not supposed to be getting." She agreed with the ALJ that the department would not have known her intent, because she "answered the questions wrong." As to why she did not contact the department if she knew she was getting more on her unemployment checks than she should have, the employee did not know. She tried to provide the ALJ with an answer, guessing as to what may have been her mind frame at the time. The employee knew that, if there was an overpayment, she would have to pay it back. She "had been through that before."

Issues

The issues to be decided are whether the employee worked and earned wages in weeks 44 of 2012 through 4 of 2013; whether she quit a job in week 48 of 2012; whether she received vacation pay in week 4 of 2013; whether she concealed her work, wages, quitting, and vacation pay; whether she received benefits to which she was not entitled and which she must repay; and whether any concealment penalties or future benefit reductions must be assessed.

Standards and Burden of Proof of Concealment

Claimants who file for unemployment insurance benefits are responsible for correctly and completely reporting information for each week they claim benefits, because benefits are initially paid based on the information claimants provide. Claimants who conceal information from the department when filing for benefits may be subject to overpayments and penalties. For unemployment insurance purposes, conceal means "to intentionally mislead or defraud the department by withholding or hiding information or making a false statement or misrepresentation."(6)

A claimant who conceals work performed or wages earned when filing a weekly claim certification is ineligible to receive benefits for the week claimed.(7) In addition, a claimant who conceals work performed, wages earned, or another material fact concerning benefits eligibility when filing a weekly claim certification is ineligible for benefits in an amount equivalent to two, four, or eight times the claimant's weekly benefit rate for each act of concealment.(8) This ineligibility is applied against benefits and weeks of eligibility for which the claimant would otherwise be eligible after the week of concealment.(9) Furthermore, consistent with federal directives, the department assesses a penalty against the claimant in an amount equal to 15 percent of the benefits erroneously paid to the claimant as a result of one or more acts of concealment.(10)

A claimant is presumed eligible for unemployment insurance benefits, and the party resisting payment must prove disqualification.(11) The burden to establish that a claimant concealed information is on the department.(12) As a form of fraud, concealment must be proven by clear, satisfactory, and convincing evidence.(13)

The unemployment insurance law must be "liberally construed to effect unemployment compensation coverage for workers who are economically dependent upon others in respect to their wage-earning status."(14) Laws imposing forfeitures, by contrast, must be strictly construed to narrow the range of acts that will lead to the harsh result of a forfeiture.(15) As a result, concealment will not be found where a claimant makes an honest mistake or misinterprets information received from the department.(16) Concealment requires an intent or design to receive benefits to which the claimant knows he or she is not entitled.(17)

The existence of fraud in the form of concealment must be resolved on a case-by-case basis. Because direct proof of a claimant's intent is rarely available, fraud may be proven by indirect (circumstantial) evidence and reasonable inferences drawn from the facts. There is a rebuttable presumption that parties intend the natural consequences of their actions.(18)

Analysis

In any case where concealment is an issue, the commission first determines whether there is sufficient direct evidence of concealment, such as an admission by the claimant, to conclude that the claimant intended to mislead or defraud the department to receive benefits to which the claimant knew he or she was not entitled. If there is not sufficient direct evidence of concealment, the commission then looks to see whether there is sufficient indirect evidence from which the commission can infer an intent on behalf of the claimant to mislead or defraud the department in order to receive benefits to which the claimant knew he or she was not entitled. Few cases contain direct evidence of concealment; most cases must rely on indirect evidence and the inferences that can be drawn from that evidence to establish concealment.

Review of the indirect evidence generally involves the following inquiry:

1. Did the claimant file a claim for each week at issue?
2. Did the claimant provide incorrect information to the department in filing the claim?
3. Were benefits improperly paid to the claimant as a result of the incorrect information?
4. Do the circumstances create an inference that the claimant intentionally provided incorrect information in order to obtain benefits to which the claimant was not entitled?

Generally, in analyzing whether a claimant obtained benefits to which he or she was not entitled and should be required to repay, only questions (1), (2), and (3) are relevant. However, in analyzing whether a claimant engaged in concealment, which requires a showing by clear and convincing evidence that a claimant intentionally misled or defrauded the department in order to obtain benefits to which the claimant knew he or she was not entitled, and which results in the imposition of a monetary penalty over and above the repayment of benefits, question (4) must be answered as well. An inference of concealment is not created by a mere showing that a claimant provided an incorrect answer when filing a claim.

If the evidence presented by the department does not suggest that the claimant intentionally provided an incorrect answer in order to obtain benefits to which the claimant knew he or she was not entitled, the inquiry ends. No concealment will be found.(19)

If the department presents sufficient evidence to create a reasonable inference that the claimant intended to mislead or defraud the department in order to receive benefits to which the claimant knew he or she was not entitled, the inquiry next turns to whether the explanation offered by the claimant for his or her actions successfully overcomes this inference.

This analysis is case specific, but the factors that may be considered are whether the claimant acted as a reasonable person filing for unemployment insurance benefits or whether the claimant acted in a wilful or reckless disregard of his or her responsibilities as a claimant when filing a claim. If the claimant establishes that it is more probable than not that he or she has made an honest mistake or good faith error in judgment, no concealment will be found. However, the claimant still will be required to repay the benefits which were overpaid. If the claimant fails to establish an honest mistake or good faith error in judgment, the inference of concealment drawn from the evidence remains and the commission will find concealment.

Application

Exhibit 5 established that the employee filed claim certifications for weeks 44 of 2012 through 4 of 2013. On those certifications, the employee answered "No" each week to Question No. 4, which asked "During the week, did you work or did you receive or will you receive sick pay, bonus pay or commission?" Exhibits 1 and 3, together with the testimony of the employer and the employee, established that the employee did, in fact, work and earn wages in weeks 44 of 2012 through 3 of 2013. The employee did not dispute the hours and wages reported by Arby's and TRH Restaurants, Inc.

The employee agreed that she did not report on her weekly claim certification for week 48 of 2012 that she quit her employment with TRH Restaurants, Inc. She also agreed that she did not report on her weekly claim certification for week 4 of 2013 that she received vacation pay from Arby's. Thus, the record supports a finding that the employee filed claim certifications for the weeks at issue and that she provided incorrect information on those claims.

Claimants who earn wages in any given week may be eligible for partial unemployment benefits according to the partial benefits formula found at Wis. Stat. § 108.05(3)(a). Because the employee admittedly received full unemployment benefit checks for weeks 44 of 2012 through 4 of 2013, the record establishes that benefits were improperly paid to the employee as a result of the incorrect information she provided to the department.

The next step is to determine whether the circumstances in this case allow the commission to draw a reasonable inference that the claimant intentionally provided incorrect information in order to obtain benefits to which she was not entitled.

The employee was sent a Handbook for Claimants in September, and possibly in October, 2012. The employee acknowledged that she received a handbook, read it, and understood it. Although past commission decisions have referenced a presumption of intent based upon receipt of the Handbook for Claimants and an incorrect answer to Question No. 4 on the weekly claim certification, this is no longer sufficient evidence from which to infer an intent to mislead or defraud the department. Past commission decisions involved a different, much simpler Question No. 4 ("Did you work?") and the fact that hardcopy handbooks were sent with initial claims and often at other points during the claims process. The current form of Question No. 4, which asks "During the week, did you work or did you or will you receive sick pay, bonus pay or commission?", contains more than one question and, as such, is more susceptible to misinterpretation. An inference of intent to mislead or defraud the department cannot be made where the only evidence is that the claimant answered a compound question incorrectly.

In this case, the record shows that the employee had prior filing experience, having filed since 2011; had reported wages she earned on her weekly claim certifications, albeit in response to a simpler Question No. 4; and had received partial benefits. The employee received a Handbook for Claimants, which she read and reportedly understood. The employee understood the need to report her work and wages on her weekly claim certifications. The department had notified her in the past of a mistake she had made when filing her claims, and her mistake had led to an overpayment. Therefore, from this evidence, it could be reasonably inferred that the employee intended to receive benefits to which she knew she was not entitled when she failed to report her work, wages, and other material facts on her claim certifications for the weeks at issue.

The final step, therefore, is to determine whether the employee rebutted, through affirmative proof of good faith on her part, the inference that she intended to mislead or defraud the department.(20)

The employee testified that she was confused and made an honest mistake. The ALJ did not credit the employee's testimony and found that the employee's failure to provide accurate information to the department regarding her work and wages, vacation pay, and separation was intentional. The ALJ found that the questions to which the employee gave a false answer were "simple and straightforward." When consulted concerning her personal impressions of the material witnesses, the ALJ stated that she "did not find the employee credible in her testimony. She was conflicting and indecisive."

The commission disagrees with the ALJ's credibility assessment. It was clear from the employee's testimony throughout the hearing that she was confused. The employee was confused about how the unemployment insurance program operates in general and was confused by Question No. 4 on the weekly claim certifications in particular. The employee may have come across to the ALJ as conflicting and indecisive because the employee was at a loss as to how to answer the questions posed to her. The employee, who viewed the ALJ as an "important person" whose time the employee did not want to waste, believed that she had filed her weekly claim certifications properly. Prior to the hearing, the employee had asked for proof that she had not done so. Proof was never provided to her. When the employee finally saw the documents marked as Exhibit 5 and realized that she had, in fact, answered questions incorrectly, she was stunned.

Throughout the process, the employee believed that she was filing for unemployment insurance benefits "against" Arby's and only Arby's. Consequently, she did not believe that it was necessary to inform the department that she was working for TRH Restaurants, Inc., or that she quit that employment, after attending school and working two jobs became too much for her. The employee handled her short-term employment with TRH Restaurants, Inc. in the same manner as her short-term employment with Sbarro, because she had not been informed that she had handled her employment with Sbarro incorrectly. The employee's misunderstanding of how and when employers become liable for benefits and what information the department needs to ascertain a claimant's eligibility for benefits is not uncommon.(21)

The employee also did not understand what was being asked of her by the automated claims system in weeks 44 of 2012 through 3 of 2013. As a result, she did not answer Question No. 4 correctly and was never prompted to report her wages. The employee's misunderstanding is reasonable under the circumstances.

Contrary to the ALJ's finding, Question No. 4 in its current incarnation is not simple and straightforward. While the department's former "Did you work?" version may have been straightforward and not easily susceptible to misinterpretation,(22) the department's current version presents at least two distinct, alternative questions within one compound question. There are inherent dangers in inviting a "Yes" or "No" answer to a compound question, because it is often not possible to be certain to which part, or parts, a single response applies.(23) This is especially true when a claimant files claims by telephone, where the last question heard is not "Did you work?" When the answer to a compound question relates to the substantive issues and the ultimate outcome in a case, as it does here, the commission will not infer an intent on the part of the claimant to mislead or defraud the department because both the question and the answer can be misunderstood.(24)

The commission will also not infer an intent on the part of the employee to mislead or defraud the department based on the fact that she was an experienced claims filer who had received partial benefits in the past. The employee testified that she is learning disabled and "a little slow." The employee had, since May 2011, routinely reported her work and wages to the department prior to the modification of Question No. 4. The department was frequently required to adjust the employee's wages to include work available but not performed, and no fraud was alleged. Based on a consideration of the employee's claims history as a whole, it is most reasonable to infer that, had the employee not misunderstood Question No. 4 beginning in week 44 of 2012, she would have reported her work and wages to the department for the weeks at issue.

With respect to week 4 of 2013, the evidence does not establish that the employee received vacation pay in that week or that she had due notice in that week that such pay was forthcoming. Arby's attributed the employee's vacation pay to week 4 of 2013, but the check to compensate the employee for her unused vacation time was not issued until February 1, 2013 (week 5). The employee had filed her claim for week 4 of 2013 three days earlier.

Finally, the commission will not find concealment as a result of the employee's failure to contact the department after receiving larger unemployment benefit checks than she was expecting. The commission accepts the employee's testimony that it did not "dawn on her" to do so. The employee works in low-skilled jobs, lacks sophistication, and has an erroneous understanding of the unemployment insurance program. The employee tried to answer the ALJ's question by speculating as to what was going on in her mind in November and December 2012, but the employee honestly could not remember and did not know.

The commission therefore finds that, in weeks 44 through 3 of 2013, the employee worked and earned wages, but she did not conceal from the department the work performed and the wages earned in those weeks, within the meaning of Wis. Stat. § 108.04(11)(b), and is thus entitled to partial benefits for those weeks, pursuant to Wis. Stat. § 108.05(3).

The commission further finds that, in week 48 of 2012, the employee quit her employment with TRH Restaurants, Inc., but she did not conceal that material fact from the department, within the meaning of Wis. Stat. § 108.04(11)(a).

The commission further finds that, in week 4 of 2013, the employee did not receive vacation pay, pursuant to Wis. Stat. § 108.05(4)(b), and therefore did not conceal that pay from the department, within the meaning of Wis. Stat. § 108.04(11)(a).

The employee's benefit entitlement for the weeks at issue, and corresponding overpayment, is as follows:

 

Week

Hours worked

Wages earned

Benefits paid

Benefits due

Overpayment

44/12

25 hrs, 26 min.

$192.92

$188

$ 78

 $110

45/12

26 hrs, 42 min.

$202.92

$188

$ 72

 $116

46/12

30 hrs, 26 min.

$231.28

$188

$ 53

 $135

47/12

33 hrs, 7 min. (Arby’s); 17 hrs, 18 min. (TRH)

$251.68

$125.43

$188

$  0

 $188

48/12

33 hrs, 4 min. (Arby’s); 10 hrs, 6 min. (TRH)

$251.31

$  73.23

$188

$  0

 $188

49/12

27 hrs, 34 min.

$209.51

$188

$ 67

 $121

50/12

38 hrs, 9 min.

$289.94

$188

$ 13

 $175

51/12

36 hrs, 35 min.

$269.92

$188

$ 27

 $161

52/12

36 hrs, 35 min.

$278.03

$188

$ 21

 $167

1/13

20 hrs, 52 min.

$158.59

$188

$101

 $ 87

2/13

34 hrs, 46 min.

$264.22

$   0

TBD

-------

3/13

13 hrs, 39 min.

$103.74

$   0

TBD

-------

4/13

0

$    0.00

$   0

TBD

-------

 

Total

Overpayment

 

 

$1,448

The commission further finds that the employee's failure to report work, wages, and a quit on her weekly claim certifications for weeks 44 of 2012 through 3 of 2013, while not fraudulent, prevents waiver of recovery of the overpayment, under Wis. Stat. § 108.22(8)(c). The employee must repay the amount of $1,448.00 to the department.

DECISION

The appeal tribunal decisions are modified as to the amount of the employee's overpayment and the weeks at issue and, as modified, affirmed in part and reversed in part. Accordingly, the employee is entitled to partial unemployment insurance benefits for weeks 44 of 2012 through 3 of 2013, with the exception of weeks 47 and 48 of 2012, as set forth above. As a result of this decision, the employee is required to repay the benefits she received in error, but the amount of the overpayment is reduced from $1,880.00 to $1,448.00. Also as a result of this decision, the employee's unemployment insurance benefit amount shall not be reduced, and there is no concealment penalty.

Dated and mailed May 15, 2014

walleni3_urr . doc : 152 :   BR 317 - BR 330

BY THE COMMISSION:

/s/ Laurie R. McCallum, Chairperson

/s/ C. William Jordahl, Commissioner

/s/ David B. Falstad, Commissioner


MEMORANDUM OPINION

The department requested that the commission reconsider its decision issued on January 28, 2014, involving the employee. The commission agreed to do so and set its decision aside. The commission now addresses the arguments raised by the department in its request for reconsideration, to the extent they relate to these cases.(25)

The department argued that the commission erred in failing to consult with the administrative law judge (ALJ) who held the hearing in these cases concerning the employee's demeanor and credibility. Although the commission does not agree that it is required to consult with an ALJ in every case in which it reverses an appeal tribunal decision, it did so in these cases at the request of the department. The ALJ "did not find the employee credible in her testimony. She was conflicting and indecisive." For the reasons expressed in its decision, supra at pp. 10-11, the commission determined that the employee was credible. The commission found the employee's seemingly "conflicting and indecisive" testimony to be a reflection of the employee's confusion and a desire to answer every question posed to her by the ALJ rather than evidence of a fraudulent intent.

The department also argued that the compound nature of Question No. 4, which was formerly "Did you work?" and is now "During the week, did you work or did you receive or will you receive sick pay, bonus pay, or commission?", is not confusing. The department argued that Question No. 4 can be distinguished from the complex compound question at issue in Atunnise v. Mukasey, 523 F.3d 320, 834 (7th Cir. 2008),(26) because Question No. 4 poses "two rather simple related questions." Thus, the department argued, it is reasonable to infer that answering "No" to Question No. 4, when the claimant should have answered "Yes," is sufficient to establish an intent to mislead or deceive as the question clearly is related to benefit eligibility. The commission disagrees.

An administrative hearing is not a hearing pursuant to an order to show cause. Once the department presents evidence showing that a claimant answered a question incorrectly on a weekly claims certification, the burden of proof is not shifted onto the claimant to prove that his or her incorrect answer was not fraudulent. The burden of proof remains with the department at all times.

In the past, when a claimant answered "No" to the "Did you work?" question, absent credible evidence to the contrary, the commission was more willing to infer that a claimant, who was, in fact, working, intended to mislead or defraud the department. However, now that the "Did you work?" question is asked in conjunction with questions about various forms of past or future remuneration, the commission is unwilling to infer concealment when the claimant answers "No" but was, in fact, working. As noted in Appeals Principles and Procedures, published by the U.S. Department of Labor's Employment and Training Administration (ETA), "compound questions should never be asked if the answer relates to the substantive issues and the ultimate outcome. A compound question is a question that asks more than one question, each of which requires a separate answer. Questions should be related to one point only, so that neither the question nor the answer will be misunderstood."(27)

The commission is not alone in finding compound questions like the department's Question No. 4 a potential source of misunderstanding by claimants. In June 2011, the U.S. Department of Labor strongly encouraged states to review the wording of their continued claims certification form and telephone script to assess whether any questions or language should be made clearer to ensure claimants understand what is being asked. The following example was given:

This suggestion to rid claim certification forms and telephone scripts of two-part questions was part of an immediate call to action by the U.S. Department of Labor to all state administrators to develop state-specific strategies to bring down the improper payment rate in unemployment insurance benefits programs. The call to action was communicated in Unemployment Insurance Program Letter (UIPL)
No. 19-11, titled National Effort to Reduce Improper Payments in the Unemployment Insurance (UI) Program.(29) It was recognized that the best way to effectively reduce the improper payment rate is to prevent improper payments before they occur. The U.S. Department of Labor identified unreported or under-reported earnings by claimants as the primary cause of overpayments.

Yet, in spite of the call to action, sixteen months later, in October 2012, the department did exactly the opposite of what the U.S. Department of Labor suggested it do. The department took a relatively simple, straightforward question, one not easily susceptible to misinterpretation -- "Did you work?" -- and created a compound question -- "During the week, did you work or did you receive or will you receive vacation pay, bonus pay or commission?" In doing so, the department created an identified cause of misunderstanding by claimants and a known source of improper payments. Question No. 4 was not made clearer to ensure claimants understood what was being asked; it was made more complex and confusing. At the same time, the department also increased the penalties for concealment.

The department argued that it is reasonable to expect claimants to have an elementary knowledge of grammar and to know how to correctly answer compound questions, although it conceded that there might be exceptions. "For example, a claimant might demonstrate a lack of fluency in English" or "prove by competent evidence that they have a reading or comprehension disability that reasonably explains their mistaken answer." The department argued that there was no evidence of a "connection between Wallenkamp's claim of learning disability and her repeated negative answers to claims questions in a way that might disqualify her from benefits."

The reason no connection was made between the employee's learning disability and her failure to provide accurate information to the department is because the ALJ did not develop the record on this issue. It was clear that the employee did not understand her responsibility to report her second, short-term job to the department. After the ALJ twice explained to the employee why it was necessary, the employee remained confused. The employee apologized to the ALJ and stated that she, the employee, was learning disabled and "a little slow." Not a single follow up question was asked of the employee.

The "fair hearing" provision in sec. 303(a)(3) of the Social Security Act requires a reasonable opportunity for workers whose claims are denied to be heard by an impartial tribunal in an adjudicatory proceeding which assures them of elementary fairness. An unemployment insurance ALJ is responsible for discovering the facts and may not rely on the parties to present their cases and facts, as they understand them, and to offer complete proof.(30) Moreover, state unemployment agencies, such as the department, have a public duty to cooperate in revealing pertinent facts and other evidence that are peculiarly within their own knowledge, whether favorable or unfavorable to the claimant. A state agency is not to assume a hostile or an indifferent attitude in cases in which it views itself as an adverse party, because it leaves to the claimant the task of discovering exculpatory facts, a task claimants are most likely ill-prepared to perform.(31) Thus, when the department alleges that a claimant has committed fraud and the claimant states that she is learning disabled, an ALJ is expected, at a minimum, to follow up on the claimant's statement and attempt to ascertain whether any cognitive difficulties contributed to the confusion on the part of the claimant and led to an honest mistake.

The department correctly pointed out in its request for reconsideration that the commission typically requires that claims of a medical condition must be documented by competent medical evidence, usually a certified medical report. This is true when a claimant is asserting that certain behavior was beyond the claimant's control as a result of a medical condition. However, in concealment cases, the department is the party asserting fraud and the absence of an honest mistake or misunderstanding on the part of a claimant. In response, a claimant may testify as to matters within the claimant's personal knowledge. A claimant may establish the existence of learning, reading, and comprehension difficulties through non-certified and non-medical evidence by testifying, for example, as to whether he or she received special education services in school, required an individualized education plan, had low reading scores, or failed to graduate from high school.

Finally, the department argued that it cannot administratively apply the commission's factor of a "fundamental misunderstanding of the UI Program." The department asked "what level of understanding of the program is required" and argued that a claimant's understanding is not even relevant to a claimant's intent in answering a simple question such as "Did you work?" The commission, again, disagrees.

One, the department's question about work is no longer simple. Two, the department's assertions of insurmountable administrative difficulties in ascertaining a claimant's understanding of the unemployment insurance program, as well as the department's need to do so, are belied by its own training manual.

The department's Disputed Claims Manual, on the topic of fraud, instructs adjudicators to establish why the claimant failed to report wages.

When an investigation establishes a claimant has given us false answers we must determine the claimant's intent. We must decide if this was an innocent mistake or done on purpose or with such careless disregard of the claiming process as to amount to an intentional act.(32)

Adjudicators are advised that a thorough review of the claim record is required prior to interviewing a claimant concerning an allegation of concealment. Adjudicators are instructed that they must make a reasonable attempt to obtain the relevant information from the claimant. Among the considerations are:

In the past, adjudicators were instructed to find no intent (1) if there were conflicting answers on an initial or continued claim which clearly establish the claimant was confused or that the claimant did not understand what was being asked or answered; (2) if there was first-time, non-conventional work; (3) if correct information was given to the claimant by agency personnel but the circumstances and facts establish that confusion or a misunderstanding reasonably occurred; (4) if the claimant has a history of mental or physical illness which, when facts are documented, explain the claimant's unintentional concealment; and (5) if a review of prior and/or later claimant records shows the claimant properly and accurately reported work and wages or answered questions, an omission, for example, of partial work and wages, supports a finding that an honest mistake was made. An omission could involve more than one employer.(34)

As explained in the commission's decision, supra, the employee in this case misunderstood her obligations under the unemployment insurance law to report short-term employment and her separation from that employment. The employee also was confused by the compound nature of Question No. 4 on the weekly claim certifications. As a result, she did not provide accurate information to the department and received benefits to which she was not entitled. However, the employee did not have the fraudulent intent essential to support a finding of concealment. Therefore, while she is required to repay the benefits she received in error, an additional concealment overpayment penalty and a reduction of future benefits will not be imposed.

cc: ATTORNEY ROBERT C JUNCEAU



Appealed to Circuit Court.  Affirmed, February 23, 2015.  [Circuit Court Decision Summary].  Appealed to the Court of Appeals.  Affirmed, February 2, 2016. [Court of Appeals Decision Summary].

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Footnotes:

(1)( Back ) A mistake was made when referencing federal case law.

(2)( Back ) The employee's claims history is reflected in an "ADJUDICATORS PRELIMINARY CLAIMANT REPORT," which was not marked as an exhibit but was a report of which the ALJ stated she would take administrative notice. The ALJ referred to it as the "overnight report."

(3)( Back ) As explained in footnote 2, the ALJ stated during the hearing that she would take administrative notice of department records, including the "overnight report." The employee did not object. However, the best practice is for an ALJ to show parties the report or other department records of which the ALJ plans to take administrative notice and mark the report or records as an exhibit. See Wis. Admin. Code § DWD 140.16(2). This is particularly true when the record is part of the hearing file, as was the "overnight report" in this case.

(4)( Back ) The commission notes that, as of week 28 of 2011, the week ending July 14, 2011, claimants were no longer allowed to use confirmation numbers to file their weekly claim certifications.

(5)( Back ) The commission understands LD to mean "learning disabled."

(6)( Back ) Wis. Stat. § 108.04(11)(g).

(7)( Back ) Wis. Stat. § 108.05(3)(d).

(8)( Back ) Wis. Stat. § 108.04(11)(a), (b) and (be).

(9)( Back ) Wis. Stat. § 108.04(11)(bm).

(10)( Back ) Wis. Stat. § 108.04(11)(bh).

(11)( Back ) Wis. Stat. §108.02(11); Kansas City Star Co. v. DILHR, 60 Wis. 2d 591, 602, 211 N.W.2d 488 (1973).

(12)( Back ) In re Scott Lynch, UI Dec. Hearing No. 10404406AP (LIRC Mar. 11, 2011); Holloway v. Mahler Enter., Inc., UI Dec. Hearing No. 11606291MW (LIRC Nov. 4, 2011).

(13)( Back ) Kamuchey v. Trzesniewski, 8 Wis. 2d 94, 98, 98 N.W.2d 403 (1959); Schroeder v. Drees, 1 Wis. 2d 106, 112, 83 N.W.2d 707 (1957).

(14)( Back ) Princess House, Inc. v. DILHR, 111 Wis. 2d 46, 62, 330 N.W.2d 169 (1983).

(15)( Back ) Liberty Loan Corp. & Affiliates v. Eis, 69 Wis. 2d 642, 649, 230 N.W.2d 617 (1975).

(16)( Back ) In re Joseph Hein, Jr., UI Dec. Hearing No. 00605374MW (LIRC Dec. 13, 2001); In re Scott Lynch, supra.

(17)( Back ) Karandjeff v. Cmty. Living Alliance Inc., UI Dec. Hearing No. 11611430MW (LIRC June 20, 2012); Holloway v. Mahler, supra, and the cases cited therein; In re Nestor Gutierrez, UI Dec. Hearing No. 00005766MD (LIRC July 19, 2002).

(18)( Back ) Krueger v. LIRC & Gen. Motors Assembly Div., No. 81-CV-559A (Wis. Cir. Ct. Rock Cnty. Dec. 3, 1982). See, also, Muller v. State, 94 Wis. 2d 450, 469, 289 N.W.2d 570 (1980)(when there are no circumstances to prevent or rebut the presumption, the law presumes that a reasonable person intends all the natural, probable, and usual consequences of his deliberate acts).

(19)( Back ) In re Leonard Miszewski, UI Dec. Hearing No. 12401605AP (LIRC Nov. 30, 2012).

(20)( Back ) See, e.g., In re Henry A Warner, UI Hearing No. S9100679MW (LIRC July 16, 1993).

(21)( Back ) See, e.g., Thomas v. IndependenceFirst Inc., UI Dec. Hearing No. 13609613MW (LIRC March 4, 2014); Haebig v. News Publishing Co. Inc. of Mt. Horeb, UI Dec. Hearing Nos. 13000910MD, 13000911MD, and 13000912MD (LIRC Jan. 31, 2014); In re Mortensen, UI Dec. Hearing No. 05002751JV (LIRC Dec. 14, 2005); and In re Hein, Jr., UI Dec. Hearing No. 00605374MW (LIRC Dec. 13, 2001).

(22)( Back ) See, e.g., Candace K. Pitts, UI Dec. Hearing No. 95000045DV (LIRC May 25, 1995).

(23)( Back ) See, e.g., Atunnise v. Mukasey, 523 F.3d 320, 834 (7th Cir. 2008), citing 81 Am. Jur. 2d Witnesses § 714 (2008)(the vice of the compound question is generally recognized; a question which embraces several questions is improper).

(24)( Back ) Handbook for Measuring Unemployment Insurance Lower Authority Appeals Quality, ET Handbook No. 382 (3rd Ed.), U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance, p. 22 (March 2011).

(25)( Back ) The commission did not consider the affidavits the department submitted with its request for reconsideration; the information presented therein was not new or recently developed. A hearing will not be scheduled for the submission of additional evidence.

(26)( Back ) The department properly pointed out that the commission's original decision contained the wrong case name and citation to support its view of the compound nature of the question. The citation has been corrected.

(27)( Back ) Handbook for Measuring Unemployment Insurance Lower Authority Appeals Quality, Third Edition, U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance, March 2011, Appendix B: Appeals Principles and Procedures, pp. 4-5.

(28)( Back ) UIPL No. 19-11, U.S. Department of Labor, Employment and Training Administration, June 10, 2011, pp. 4-7.

(29)( Back ) The U.S. Department of Labor's Employment and Training Administration interprets federal law requirements pertaining to unemployment insurance as part of its role in the administration of the federal-state unemployment insurance program. These interpretations are issued in Unemployment Insurance Program Letters (UIPLs) to state employment agencies. As agents of the federal government, states must follow the operating instructions and guidance provided in UIPLs. See DWD v. LIRC, 2006 WI App 241,  2, 297 Wis. 2d 546, 725 N.W.2d 304.

(30)( Back ) Handbook for Measuring Unemployment Insurance Lower Authority Appeals Quality, Third Edition, U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance, March 2011, Appendix B: A Guide to Unemployment Insurance Benefit Appeals Principles and Procedures, pp. 4-5.

(31)( Back ) Id. at pp. 29-31.

(32)( Back ) Disputed Claims Manual, Department of Workforce Development, Division of Unemployment Insurance, Fraud, Sec. II, Part C. Available at http://dwdworkweb/uibmanuals/dc/fraud.htm.

(33)( Back ) Id., Sec. IV, Part V.

(34)( Back ) Wisconsin Unemployment Compensation Manual, Vol. 4, Part II, Chap. 3, "Fraud," January 1993. 

 


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