LASHANDA S HOLLOWAY, Employee
MAHLER ENTERPRISES INC, Employer
/s/ Robert Glaser, Chairperson
/s/ Ann L. Crump, Commissioner
/s/ Laurie R. McCallum, Commissioner
NOTE: The Wisconsin Industrial Commission was the predecessor to both the Department of Workforce Development and the Labor and Industry Review Commission. The Industrial Commission held as early as 1959 that concealment involved an "intentional plan to withhold information for [a] fraudulent purpose." Case No. 59-A-1488, 1976 Wisconsin Unemployment Compensation Digest BR 335: OVERPAYMENT - FRAUD, pp. BR 23-24. In so reasoning, the tribunal cited Kamuchey v. Trzesniewski, 8 Wis. 2d 94, 99, 98 N.W.2d 403 (1959) ("Active concealment consists of a suppression of a fact and implies a purpose or design."). Court recognition of this position of the commission in the unemployment compensation context occurred as early as 1963, in Donahue v. Industrial Comm'n, slip op. at 3, Case No. 111-269 (Wis. Cir. Ct. Dane Co., Aug. 13, 1963) ("The commission in its past interpretation of this statute has determined that the action of the claimant must be a willful act of concealment and one not due to lack of knowledge or ignorance. Also it is conceded that active concealment consists of a suppression of a fact and implies a purpose or design."). The Kamuchey reasoning that concealment implies purpose or design thus has been part of the unemployment law of concealment for more than 50 years.
The Labor and Industry Review Commission has regularly reaffirmed this principle over the last two decades. See, e.g., In re Willingham, slip op. at 2, UI Dec. Hearing No. 91609602MW (LIRC June 5, 1992) ("There must be the intent to receive benefits to which the individual knows he or she is not entitled."); In re Greta S. Jenkins, slip op. at 3, UI Dec. Hearing No. 92602768MW (LIRC July 8, 1992) ("There must be the intent to receive benefits to which the individual knows he or she is not entitled."); In re Joseph D. Siegel, slip op. at 4, UI Dec. Hearing No. 95003803MD (LIRC Aug. 23, 1996) ("There must be the intent to receive benefits to which the individual knows he or she is not entitled."); and In re Nestor Gutierrez, slip op. at 2, UI Dec. Hearing No. 00005766MD (LIRC July 19, 2002) ("There must be the intent to receive benefits to which the individual knows he or she is not entitled.").
In 2007, with presumed knowledge of this interpretation, the Legislature enacted Wis. Stat. § 108.04(11)(g), which defines "conceal" to mean "to intentionally mislead or defraud the department by withholding or hiding information or making a false statement or misrepresentation." The plain language notions of "intentionally misleading" and "defrauding" are consistent with the idea that concealment involves the wrongful purpose or design the court deemed necessary in Kamuchey. From this background, what it means to intentionally mislead or defraud may be stated simply: it means the claimant is trying to get away with something the claimant knows he or she should not be getting away with. In most unemployment insurance cases where the issue is concealment, what the claimant will be alleged to have tried to get away with, is gaining unemployment benefits to which the claimant knows he or she is not entitled. By contrast, where a claimant's incorrect answer to a material question is due to ignorance or mistake, it will not be the case that the claimant is trying to get away with something, and that claimant will not be guilty of concealment. See, e.g., In re Scott G. Lynch, UI Dec. Hearing No. 10404406AP (LIRC Mar. 11, 2011) (unlikely that claimant, had he intended to conceal earned wages, would have reported the work and part of the wages to the department; more likely that he simply misinterpreted information he received from the department); In re Joseph W. Hein, Jr., UI Dec. Hearing No. 00605374MW (LIRC Dec. 13, 2001) (incorrect answers due to mistaken interpretation of information from the department is not concealment) and Case No. 59-A-1829, 1976 Wisconsin Unemployment Compensation Digest, BR 23 (where claimant reported cash earnings, but did not report the $45 monthly rent discount he received in exchange for maintenance work because he did not think the discount was wages he had to report, there was no concealment).
In the present case, the department's legal conclusion of concealment on the claimant's part was based solely upon the claimant's failure to respond to or dispute the information available to the department. In the civil context, an adverse inference may be drawn from one's intentional failure to answer a question (here, the claimant's failure to respond to department inquiry). See, e.g., Grognet v. Fox Valley Trucking Service, 45 Wis. 2d 235, 239, 172 N.W.2d 812 (1969). The evidence does not establish, though, that the claimant's failure to respond was intentional.
The department has the burden of proof to establish concealment, see In re Lynch, supra, and as a form of fraud, concealment "must be proven by clear and satisfactory evidence," a higher degree of proof than in ordinary civil cases.
Kamuchey v. Trzesniewski, 8 Wis. 2d 94, 98. The evidence before the department did not meet this standard.
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