EDDY MC CLETON, Employee
OLSON CARPET TILE AND DESIGN LLC, Employer
On January 8, 2014, an administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued two appeal tribunal decisions in this matter.
For Hearing No. 13609472MW, the ALJ held that the employee worked and earned wages beginning in week 41 of 2013,(1) and that he concealed the work and wages on his weekly claim certifications. As a result, the employee was overpaid benefits in the amount of $927.00, and he was assessed a concealment overpayment penalty of $139.05, that he was required to repay.
For Hearing No. 13609473MW, the ALJ held that the employee concealed work and wages on his weekly claim certifications beginning in week 41 of 2013. As a result, in addition to the concealment overpayment penalty assessed for Hearing No. 13609472MW, the ALJ concluded that the statutory concealment penalty applied and therefore the employee's future benefit amounts would be reduced by $3,090.00 for benefits and weeks that become payable in the six-year period ending November 16, 2019.(2)
The employee filed a timely petition for review for each decision. 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 employee appeared at the hearing but the employer did not. During the employee's testimony, several documents were marked by the ALJ and later received into evidence. The department did not present witness testimony.
Facts Adduced at Hearing
Exhibit 3, an "Adjudicators Preliminary Claimant Report," is a report summarizing the employee's unemployment claiming history. This report shows:
• The employee sought unemployment insurance benefits for one week in 2003, but he did not receive benefits at that time.
• The employee next initiated a claim for unemployment benefits on January 4, 2011. For the calendar weeks ending January 29, February 5, April 16, and April 23, 2011 (weeks 5, 6, 16 & 17), the employee completed weekly claim certifications, answering "Yes" to Question 4, "Did you work?"(3) The employee reported the wages he earned and received partial unemployment insurance benefits for weeks 16 and 17 of 2011.
• The employee filed a new claim for benefits on April 1, 2012. The "DISPUTED CLAIMS RECORDS" portion reflects that on October 9, 2012, two determinations were issued addressing week 17 of 2012, the calendar week ending April 28, 2012. The first determination addressed an offer of work issue and allowed benefits. The second determination found a forfeiture of $726.00 in unemployment benefits based upon a concealment finding, presumably a failure to report the offer of work referenced in the companion determination. The determinations were not appealed.
• Most recently, the employee initiated a claim for benefits on June 24, 2013 (week 25). He began receiving unemployment insurance benefits of $309.00 per week. For each week he claimed, the employee completed a weekly claim certification.
The employee testified that, at some point, as part of the claiming process, he received a Handbook for Claimants, explaining the benefit claim requirements and responsibilities.
Exhibit 7, a FORMS SENT INQUIRY SCREEN, is a list of unemployment documents sent to the employee. It documents that the employee was mailed a claim confirmation form, FORM TYPE 10148, on June 25, 2013.
Exhibit 4 is a sample FORM TYPE 10148 (UCB-10148) sent to claimants, with a revision date of September 15, 2011.(4) It is titled "CLAIM CONFIRMATION AND INSTRUCTIONS." While the sample explains that it was sent with a packet containing the Handbook for Claimants (if the claim was based upon a new application), it is important to note that the department's policy manual update dealing with the Handbook for Claimants, dated June 18, 2013, UID No. 13-12, provides that as of June 20, 2013, the Unemployment Insurance Division discontinued mailing printed copies of the handbook. UID No. 13-12 references a flyer, a UCB-17399-P, to be mailed with the Confirmation Form UCB-10148, which provides instructions for accessing the on-line version of the handbook. Exhibit 7, the FORMS SENT INQUIRY SCREEN, does not reflect that this flyer was sent; it also does not reflect which revision date version of the UCB-10148 was sent. Under these circumstances, the department has not established that a handbook or flyer providing instructions for accessing the on-line version of the handbook was mailed with the June 25, 2013, confirmation.
Despite this, the ALJ marked as Exhibit 5, a photocopy of the Handbook for Claimants, with a revision date of October 2012. Prior to the initiation of his 2013 claim, the employee's most recent new claim was in week 14 of 2012. If the employee was mailed a handbook at that time, Question 4 was simply "Did you work?" not ""During the week, did you work or did you receive or will you receive sick pay, bonus pay or commission?" as described in Exhibit 5.
At the hearing, the employee admitted that he did not read the handbook that he received. He was not asked when he received a handbook or the revision date of the handbook he received.
Exhibit 7 also reflects that a "350" was sent in March 2012. The record does not contain a 350 or a description of such a form.(5) The ALJ referenced this portion of Exhibit 7 and asked the employee if he had been warned in March 2012 that he needed to report work and wages from a staffing business. The employee testified that he had been warned by the department that he needed to report his work and wages.
In October 2013, the employee began performing floor installation services for the employer, Olsen Carpet Tile and Design LLC. The department received a weekly earnings audit from the employer; this audit was marked as Exhibit 2 and reflects wages earned by the employee in weeks 41 through 44 of 2013. In addition, Exhibit 1 is an investigation record of contact with the employer's owner; it reflects that the employee earned wages of $168.00 for week 46 of 2013. At the hearing, the employee agreed with these wage amounts. Specifically, in the calendar weeks ending October 12, 19, 26, and November 2 and 16, 2013 (weeks 41-44 and 46), the employee worked 23, 35, 20, 21.5, and 14 hours, respectively. The employee earned $12.00 per hour for his work.
For his weekly claim certifications for weeks 41 through 44 and 46 of 2013, the employee answered "No" to Question 4, "During the week, did you work or did you receive or will you receive sick pay, bonus pay or commission?"(6) Based on his certifications in these weeks, the employee received his full weekly benefit rate of $309.00 for weeks 41, 42 and 43 of 2013.(7)
After the department learned of the employee's work and wages, an adjudicator contacted the employee. Exhibit 8 is a record of that contact. According to the adjudicator's report, when questioned by the adjudicator, the employee explained that he thought he was only required to report work and wages if he worked over 40 hours per week. He added that his understanding was based on incorrect information from a friend; he did not read the handbook and did not think to contact a claims specialist.
The employee testified that Exhibit 8 was an accurate summary of his contact with the adjudicator. However, during the hearing his explanation for why he failed to report his work and wages changed somewhat. He now indicated he had been told that, if he was not working more than 30 hours per week, he could still file for unemployment. When questioned why he did not report the work when asked, he stated that he did not know he could do so. He explained that he thought the question was just a "yes or no" question and referenced both a 30 and 40 hour limiter. He added that he was to blame for not reading the instructions but indicated that the penalty was very harsh. He also noted that he was only paid every other week by the employer and commented on the size of the paychecks given the part-time work and deductions.
Issues
The issues to be decided are whether the employee worked and earned wages in the applicable weeks, whether he concealed his work and wages, whether he received benefits to which he was not entitled and which he must repay, and whether any concealment penalties or future ineligibility for benefits 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."(8)
A claimant who conceals work performed or wages earned when filing a weekly claim certification is ineligible to receive benefits for the week claimed.(9) 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.(10) This ineligibility is applied against benefits and weeks of eligibility for which the claimant would otherwise be eligible after the week of concealment.(11) 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.(12)
A claimant is presumed eligible for unemployment insurance benefits, and the party resisting payment must prove disqualification.(13) The burden to establish that a claimant concealed information is on the department.(14) As a form of fraud, concealment must be proven by clear, satisfactory, and convincing evidence.(15)
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."(16) 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.(17) As a result, concealment will not be found where a claimant makes an honest mistake or misinterprets information received from the department.(18) Concealment requires an intent or design to receive benefits to which the claimant knows he or she is not entitled.(19) 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.(20)
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 was not entitled. If there is not sufficient direct evidence of concealment, the commission 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 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 the 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 the incorrect information in order to obtain benefits to which the claimant knew he 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 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 in filing a claim. If the evidence does not suggest that the claimant did so intentionally in order to obtain benefits, the inquiry ends and no concealment will be found.(21)
• If the department does present sufficient indirect evidence to create an inference that the claimant intended to mislead or defraud the department in order to receive benefits to which the claimant knew he was not entitled, the inquiry next turns to whether the reason 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 the 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, although the claimant still will be required to repay any benefits that were overpaid to the claimant. If the claimant fails to establish an honest mistake or good faith error in judgment, the inference of concealment remains and the commission will find concealment.
Application
In this case, Exhibits 1 and 2, together with the employee's testimony, establish that the employee worked and earned wages. Exhibit 6 establishes that the employee answered "No" to Question 4, "During the week, did you work or did you receive or will you receive sick pay, bonus pay or commission?" The record thus supports a finding that the employee incorrectly answered the compound Question 4 for the week 41 through 44 and 46 claim certifications.
As outlined above, the employee's incorrect answer to Question 4 alone is insufficient evidence from which to infer intent to mislead or defraud the department to receive benefits to which the employee was not entitled. Although past commission decisions have referenced a presumption of intent based upon an incorrect answer and receipt of the handbook, the commission notes that those decisions involve a different question ("Did you work?") and the fact that hardcopy handbooks were sent with initial claims and often at other points during the claims process. Question 4 at issue in this matter was a compound question and, as such, is more susceptible to misinterpretation. An inference of intent cannot be made where the only evidence is that the employee answered a compound question incorrectly.
In addition to the incorrect answer to Question 4, however, Exhibit 3 establishes that the employee previously claimed unemployment insurance benefits in 2003, 2011, 2012 and 2013. As such, he was familiar with the unemployment insurance program and process. Also, in 2011, the employee reported wages he earned and he received partial benefits, albeit with a simpler Question 4. He knew that his benefits would be reduced in weeks that he worked and earned wages. Also, in 2012, the department found that the employee concealed information from the department, presumably regarding a failure to report an offer of work, and it imposed a forfeiture against the employee for that concealment. Given this prior determination and forfeiture, the employee knew that he was required to accurately report information on his weekly certifications and that failure to do so could result in penalties for concealment of information from the department. He also conceded that he was warned in March 2012 of the need to report work and wages. Within this context, despite receiving a Handbook for Claimants and being warned that he was "responsible for knowing the information provided in the handbook" in Exhibit 4, the employee did not read the handbook, report his work or wages, or contact the department with questions when he received full weekly benefits for weeks 41 through 43, even though he worked.
The commission infers from all of this evidence that the employee intended to receive benefits to which he knew he was not entitled when he failed to report his work and wages in 2013. The department, therefore, has met its initial burden to present evidence sufficient to infer an intent to mislead or defraud the department in order to receive benefits to which the employee knew he was not entitled to.
The inquiry next turns to whether the employee rebutted the inference of intent to mislead or defraud, by affirmative proof of good faith on his part.(22) At the hearing, the employee presented conflicting testimony that he did not realize that he was to report work if he worked fewer than 30, or fewer than 40, hours per week. He did not argue any other confusion regarding Question 4. Yet, Question 4 does not reference an hourly limiter and the employee's rationale does not adequately explain why he did not report his work of fewer than 30 or 40 hours, especially when he had reported work and wages in 2011 and had been warned in 2012 that work needed to be reported. Additionally, even after the "CLAIM CONFIRMATION AND INSTRUCTIONS" warned him of this responsibility to read the handbook, he did not do so. The employee's other explanations for appealing -- that the penalty was harsh(23) and that he was only paid every two weeks for part-time work -- also do not explain his answers on the certifications unless he knowingly lied to receive benefits, anticipating lesser penalties.
Under these circumstances, the employee's claim that he did not know to report any work with Question 4 is not credible, and the employee failed to demonstrate any good faith error on his part to rebut the inference of concealment. Thus, the commission finds the record supports by clear, satisfactory and convincing evidence that, in making the claims for the weeks at issue, the employee intentionally misled or defrauded the department by withholding or hiding information or making a false statement or misrepresentation and intended to receive benefits to which the employee knew he was not entitled.
The commission therefore finds that, in weeks 41 through 44 and 46 of 2013, the employee worked and earned wages, concealed the work and wages and was paid benefits totaling $927.00 to which he was not entitled and which he must repay, within the meaning of Wis. Stat. §§ 108.02(26), 108.03(1), 108.04 (11), 108.05(3) and 108.22(8).
The commission further finds that the employee shall be assessed concealment penalties of $139.05, or 15% of the erroneous benefits paid, and there is a $3,090.00(24) reduction in benefits and weeks that become payable during the six-year period ending November 16, 2019, pursuant to Wis. Stat. § 108.04(11).
DECISION
The appeal tribunal decision is modified to specify the weeks of issue and to reflect the commission's analysis and, as modified, is affirmed. Accordingly, in weeks 41 through 44 and 46 of 2013, the employee is not eligible for unemployment insurance benefits. He was overpaid benefits totaling $927.00 that he must repay, and an overpayment concealment penalty is assessed in the amount of $139.05. The employee's benefit amount shall have a reduction of $3,090.00 that remains in effect for benefits and weeks that become payable during the six-year period ending November 16, 2019.
Dated and mailed April 30, 2014
mccleed_urr.doc: 150: BR 317 - BR 330
BY THE COMMISSION:
/s/ Laurie R. McCallum, Chairperson
/s/ C. William Jordahl, Commissioner
/s/ David B. Falstad, Commissioner
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