MICHELE A PERLONGO, Employee

JOEY'S SEAFOOD & GRILL, Employer

On January 31, 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:

• Hearing No. 13610060MW, in which the ALJ held that the employee worked and earned wages in weeks 31, 32, 33, 35 and 36 of 2013, and that she concealed the work and wages on her weekly claim certifications. As a result the ALJ concluded that the employee was overpaid benefits in the amount of $93.00, and she was assessed a concealment overpayment penalty of $13.95, both of which she was required to repay.(1)

• Hearing No. 13610061MW, in which the ALJ held that the employee concealed work and wages on her weekly claim certifications in weeks 31, 32, 33, 35 and 36 of 2013. As a result, in addition to the concealment overpayment penalty assessed for Hearing No. 13610060MW, the ALJ concluded that the statutory concealment penalty applied, and therefore the employee's future benefit amounts would be reduced by $930.00 for benefits and weeks that become payable in the six-year period ending November 30, 2019.

The employee filed a timely petition for review. 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:

The employee and a representative of employer Martino's appeared at the hearing in person. A representative of employer Joey's Seafood & Grill appeared by telephone. The department did not present witness testimony.

Facts Adduced at Hearing

The employee had initiated a new claim year in 2011, and at some point she received a Handbook for Claimants. A handbook issued in October 2012 was admitted into evidence but it was not established that the employee had ever received that issue. The employee had first claimed benefits many years ago. Documentary evidence indicated that the employee was contacted once in 1990 about incorrect information she reported in a claim for week 8 of 1990, and once in 2003 about incorrect information she reported in a claim for week 52 of 2002. The employee had no memory of these contacts, and no evidence was presented regarding the circumstances of the incorrect reporting.

Since February 2012 the employee worked part-time at Acosta Sales and Marketing, earning $11.50 per hour. During the weeks at issue the employee's weekly benefit rate under extended benefit programs was $93.00. She filed weekly claim certifications in the weeks at issue, in which she reported the following hours worked and wages earned, all from Acosta Sales and Marketing, and she received the following partial unemployment benefits in those weeks:

 The employee received a total of $93.00 for the weeks at issue.

On July 30, 2013 (week 31), the employee began a limited-term/special event work assignment as a cashier and server for a restaurant, Joey's Seafood & Grill. She earned $9.00 per hour. She performed work for Joey's Seafood & Grill in weeks 31, 32 and 33. On August 29, 2013 (week 35), the employee began a limited-term/special event assignment for a separate restaurant, Martino's. She earned $9.00 per hour. She performed work for Martino's in weeks 35 and 36. On her claim certifications, the employee did not report her hours of work or her wages for these two employers in the weeks at issue. The hours of work and wages earned per week for these employers were as follows:

 

Week	Employer	Hours Worked	Wages Earned
31	Joey's Seafood	33:50	$328.28
32	Joey's Seafood	46:15	415.35
33	Joey's Seafood	7:25	75.38
35	Martino's	31:09	327.35
36	Martino's	4:00	36.00

For the weeks at issue, the employee filed her claim certifications on line. The employee was not adept at using a computer. When she filed her claim certifications for weeks 31, 32 and 33, she mistakenly hit the send button before entering any wage information for Joey's Seafood. The employee repeatedly called a telephone number listed in the on-line instructions in order to report her wages for Joey's Seafood, but could not get through for some time because the phone line was busy. Eventually, however, the employee made telephone contact with a representative for the department and reported her three weeks of wages for Joey's Seafood. Later, when the employee filed her claim certifications for weeks 35 and 36, she again mistakenly hit the send button before entering any wage information for Martino's. She again made repeated calls to the department and eventually got through to a representative of the department and reported her two weeks of wages for Martino's.

Issues

The issues to be decided are whether the employee worked and earned wages in the applicable weeks, whether she concealed her work and wages, whether she received benefits to which she was not entitled and which she 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, to conceal means "to intentionally mislead or defraud the department by withholding or hiding information or making a false statement or misrepresentation."(2)

A claimant who conceals work performed or wages earned when filing a weekly claim certification is ineligible to receive any benefits for the week claimed.(3) In addition, a claimant who conceals work performed, wages earned, or another material fact concerning benefit 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.(4) This ineligibility is applied against benefits and weeks of eligibility for which the claimant would otherwise be eligible after the week of concealment.(5) 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.(6)

A claimant is presumed eligible for unemployment insurance benefits, and the party resisting payment must prove disqualification.(7) The burden to establish that a claimant concealed information is on the department.(8) Because it is a form of fraud, concealment must be proven by clear, satisfactory, and convincing evidence.(9)

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."(10) 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.(11) As a result, concealment will not be found where a claimant makes an honest mistake or misinterprets information received from the department.(12) Concealment requires an intent or design to receive benefits to which the claimant knows he or she is not entitled.(13) 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.(14)

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 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.(15)

If the department presents 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 or she 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 with 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, 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

There is no dispute that the employee filed claims in each of the weeks at issue, that she failed to report her wages earned from Joey's Seafood in her claim certifications for weeks 31, 32 and 33, and failed to report her wages earned from Martino's in her certifications for weeks 35 and 36.

The hours the employee worked and amounts of wages she earned from Joey's Seafood and Martino's, broken down by weeks, were established in Exhibits 2, 4 and 5. With respect to the weeks at issue, the employee did not dispute this evidence.

The employee's failure to report her hours or wages from Joey's Seafood for weeks 32 and 33 did not result in any improper payment of benefits. The employee received no benefits for those weeks because the wages she reported from Acosta Sales and Marketing alone made her ineligible for benefits under the partial benefit formula of Wis. Stat. § 108.05(3)(a).

For week 31 the employee received $8.00 in benefits, and in week 35 she received $61.00 in benefits. These benefits were improperly paid to the employee because the total number of hours the employee worked in each of those weeks was equal to or greater than 32 (39 hours 50 minutes for week 31, and 37 hours 54 minutes for week 35). Under Wis. Stat. § 108.05(3)(c), an employee is ineligible to receive any unemployment benefits for any week in which the employee performs work for 32 or more hours.

For week 36 the employee received $24.00 in benefits. These benefits were improperly paid. Although the employee worked fewer than 32 hours in week 36 (she worked 16 hours), her total earnings for the week, $168.00, made her ineligible for a benefit payment under the partial benefit formula of Wis. Stat. § 108.05(3)(a).(16)

The total amount of improperly paid benefits, then, is $93.00.

Even though the employee received benefits to which she was not entitled as a result of her incorrect claim certifications, the evidentiary record fails to create an inference that she did so with an intent to receive benefits to which she was not entitled. As noted above, an inference of concealment is not created by a mere showing that a claimant provided an incorrect answer in filing her claim. The employee maintained that her failure to report wages from Joey's Seafood & Grill and Martino's was entirely accidental, that she diligently tried contacting the department to correct her error, and that eventually she did so. This testimony was unrebutted.

The ALJ found the employee's testimony incredible on the grounds that it was evasive and inconsistent with her claim history. The commission does not accept this credibility assessment.

The ALJ was requested to provide any demeanor impressions she might have had that related to credibility, and she responded that it was her impression that the employee's "manner of testifying, demeanor, and hesitancies were intentionally evasive." The only detail of this impression that is not conclusory is the reference to hesitancies. To the extent that hesitancies occurred in the employee's testimony, the commission attributes them to uncertainty about the ALJ's questions rather than evasiveness, and does not find them to be damaging to the employee's credibility.

The ALJ did not identify what it was about the employee's claim filing history that made her explanation not credible. The critical facts put forth by the employee to explain her mistakes were that she was attempting to file her claims on line, lacked computer skills, and was confused about how to enter wages from multiple employers on a certification. There was no evidence presented about the employee's claim filing history that cast doubt on these allegations; nothing, for instance, to suggest that the employee had demonstrated the ability in the past to file a certification on line, and to correctly report wages for multiple employers; nothing to show the degree of simplicity of the on-line claiming system with regard to reporting wages from multiple employers; and nothing about the instructions given to those who file claim certifications on-line. (The Handbook for Claimants entered into evidence was not established to be an edition that the employee had received.)

The ALJ's reference to claim filing history may have related to two pages of documentary evidence indicating that the employee had been contacted twice about providing incorrect information in claims made in 1990 and 2002, but the evidence lacks any detail about what the employee knew or should have known from those experiences that would make her explanation for her current mistakes implausible.

There was also no evidence offered by the department to contradict the employee's contention that she continued to call the department in order to provide correct information, and eventually succeeded. The department was made aware at least in part that this was the employee's position prior to hearing and therefore had the opportunity to prepare evidence to contradict the contention, but it did not do so; nor did it appear at hearing to present evidence. The commission takes it as true, then, that the employee repeatedly tried to contact the department in order to provide correct wage information for the weeks at issue. Such conduct does not indicate an intent to mislead the department. Harris v. Arandell Corporation, UI Dec. Hearing No. 13606535MW (LIRC Jan. 9, 2014). The commission also takes it as true that the employee actually reported her wage information to the department for the weeks at issue. This fact certainly prevents an inference of intent to mislead the department in order to receive benefits.

The commission therefore finds that the employee did not conceal, within the meaning of Wis. Stat. § 108.04(11)(g), hours of work and wages she earned from Joey's Seafood & Grill in 31, 32 and 33, or hours of work and wages she earned from Martino's in weeks 35 and 36 of 2013.

The commission further finds that the employee was overpaid benefits for weeks 31, 35 and 36 of 2013, in the total amount of $93.00, and that the employee must repay the overpaid benefits. Under Wis. Stat. § 108.22(8)(c), the department shall waive recovery of overpaid benefits if the overpayment was the result of departmental error and did not result from the fault of the employee. In this case, the overpayment resulted from the fault of the employee, so recovery is not waived.

The appeal tribunal decisions are reversed. Accordingly, the employee is required to repay erroneously paid benefits in the amount of $93.00. There is no 15% overpayment penalty, and there is no reduction in the claimant's benefit amount.

Dated and mailed July 22, 2014

perlomi2_urr . doc : 107 : BR 317 : BR 330

BY THE COMMISSION:

/s/ Laurie R. McCallum, Chairperson

/s/ C. William Jordahl, Commissioner

/s/ David B. Falstad, Commissioner

NOTE: The department will mail repayment instructions after this decision becomes final. The department will withhold benefits due for future weeks of unemployment in order to offset overpayment of unemployment insurance benefits and other special benefit programs that are due to this state, another state, or the federal government.

Contact the Unemployment Insurance Division, Collections Unit, P.O. Box 7888, Madison, WI 53707, to establish an agreement to repay the overpayment. The amount of the overpayment set forth above does not reflect any benefits withheld or payments that have been applied toward the overpayment. Information on the overpayment balance can be obtained by contacting the department at:

Madison Area: 608-232-0824
Milwaukee Area: 414-438-7713
Toll Free Number: 1-800-494-4944
Online: my.unemployment.wisconsin.gov

cc: Martino's

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

uploaded 2014/08/29

(1)( Back ) Two employers, Joey's Seafood & Grill, UI account number 861263 (the named party), and Marino's, UI account number 389846, participated only in hearing no. 13610060MW. The employee was the only named party and only participant in hearing no. 13610061MW.

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

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

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

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

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

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

(8)( 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).

(9)( 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).

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

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

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

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

(14)( Back ) Krueger v. LIRC & Gen. Motors Assembly Div., No. 81-CV-559A (Wis. Cir Ct. Rock Cnty. Dec. 3, 1982).

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

(16)( Back ) ($168.00 - $30.00) x .67 = $92.46. The employee's weekly benefit rate was $93.00. An employee is not eligible for benefits if the payment would be less than $5 for any week.