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

BARBARA A SMITH, Employee

JOURNAL SENTINEL INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing Nos. 13610174MW


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. 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:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

A de novo hearing was held by the ALJ on January 24, 2014, to address the issues of whether, in weeks 20 through 43 of 2013, the claimant worked and earned wages and, if so, whether, when filing weekly claim certifications for those weeks, the employee concealed her work and wages. The employee and the employer both appeared at the hearing. No one appeared to provide testimony on behalf of the department. During the parties' testimony, four documents or sets of documents were marked as exhibits and later received into evidence.

Facts Adduced at Hearing

The employee worked for a bowling alley for 27 years. The bowling alley closed in May 2013. The employee opened a claim for unemployment insurance benefits on May 13, 2013 (week 20).

At the time she opened her claim, the employee notified the department that she continued to work an average of 29 hours per week for the Milwaukee Journal Sentinel, a newspaper and media business. The employee had worked for the newspaper as a part-time mailer for nine years. She earns $11.68 per hour, which includes an extra $0.30 per hour for working on the second shift.

The employee's son helped her set up her initial unemployment benefits claim on the internet. The employee used the computer at her son's house to file her weekly claim certifications for weeks 20 through 43 of 2013. For each of those weeks, the employee answered "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 did not work for the bowling alley, the employer which caused her to claim unemployment benefits, and she did not receive any sick pay, bonus pay, or commission. The employee believed that the department was already aware that she worked part-time for the newspaper, because she had advised the department of the same when she opened her claim.

The employee reported to the department on her claim certifications for weeks 27 and 36 of 2013 that she received an extra $130.30 for 71/4 hours of holiday pay. She explained that she reported her holiday pay because, while the department was aware of her regular work for the newspaper, it would not otherwise be aware of any additional pay she received. The employee was paid benefits of $270 for weeks 27 and 36 of 2013. For all other weeks between week 20 and 43 of 2013, the employee was paid benefits of $328.

In November 2013, the employer questioned the department as to why it was being charged for unemployment benefits paid to the employee when she was currently employed by the company. The department sent a letter to the employee in December 2013 informing her of the discrepancy between her claims and her employer's wage reports. It was not until then that the employee realized that she was doing something wrong. The employee explained to the adjudicator and the ALJ that she answered Question No. 4 on her weekly claims certification the way she did because she thought the question was pertaining to the business that had closed. The employee noted that Question No. 4 asks several things. The employee also explained that she had only filed for unemployment benefits once before, nine years earlier, for one month. She was unfamiliar with the unemployment claims process.

The employee received a Handbook for Claimants when she opened her claim in May 2013. She read the booklet and explained to the ALJ that "nowhere in the handbook does it say if you are working another job, you have to put this other job in there." The ALJ did not ask the employee about her educational level, so as to assess her ability to read and understand the contents of the booklet. The booklet from the relevant time period was marked as an exhibit.

Issues

The issues to be decided are (1) whether the employee worked and earned wages in weeks 20 through 43 of 2013; (2) whether she concealed her work and wages from the department when filing weekly benefit claims; (3) whether she received benefits to which she was not entitled and which she must repay; and (4) whether any concealment penalties or future benefit reductions must be assessed.

Standards and Burden of Proof of Concealments

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."(1)

A claimant who conceals work performed or wages earned when filing a weekly claim certification is ineligible to receive benefits for the week claimed.(2) 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.(3) This ineligibility is applied against benefits and weeks of eligibility for which the claimant would otherwise be eligible after the week of concealment.(4) 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.(5)

A claimant is presumed eligible for unemployment insurance benefits, and the party resisting payment must prove disqualification.(6) The burden to establish that a claimant concealed information is on the department.(7) As a form of fraud, concealment must be proven by clear, satisfactory, and convincing evidence.(8)

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

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.(13)

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.(14)

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

The employee did not dispute that she worked for the newspaper in weeks 20 through 43 of 2013. She also did not dispute that she failed to report that work or the wages from that work on her weekly claim certifications. Because the work and wages were not reported in response to Question No. 4 on the weekly claim certification, the employee received benefits for weeks 20 through 43 of 2013 to which she was not entitled.

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 he was not entitled.

As outlined above, the employee's incorrect answer to Question No. 4 alone is insufficient evidence from which to infer an intent to mislead or defraud the department. See, e.g., Mc Cleton v. Olson Carpet Tile and Design LLC, UI Dec. Hearing Nos. 13609472MW and 13609473MW (LIRC Apr. 30, 2014). The current form of Question No. 4 contains more than one question and, as such, is more susceptible to misinterpretation. An inference of intent cannot be made where the only evidence is that the claimant answered a compound question incorrectly. Although past commission decisions have referenced a presumption of intent based upon an incorrect answer and receipt of the Handbook for Claimants, the claiming process has changed. The commission notes that its earlier decisions involved in-person claims; a simpler, straightforward question ("Did you work?"); the fact that hardcopy handbooks were sent with initial claims and often at other points during the claims process; and after-the-fact notices of questions asked, answers given, and amounts deposited were mailed to claimants.

In this case, the circumstances do not permit the commission to draw a reasonable inference that the employee intentionally provided incorrect information to mislead or defraud the department. The employee worked for a bowling alley for 27 years and only once before filed for unemployment benefits. She filed for a few weeks in 2004. It does not appear that the employee also worked for the newspaper at that time. The unemployment insurance claims process in 2013 was new to the employee. The employee had reported to the department that she continued to work part-time for the newspaper following the closure of the bowling alley. The employee mistakenly believed that she was answering the "Did you work?" portion of Question No. 4 on the weekly claim certification as it related to her work for the bowling alley, because it was the changes in that business which caused her to file a claim for unemployment benefits.

The employee did not find anything in the Handbook for Claimants which told her expressly how to answer Question No. 4 when she was laid off by one employer but continued to work part-time for another employer. As the commission explained in Hollett v. Douglas Shaffer, UI Dec. Hearing No. 13003690MW (LIRC May 8, 2014),

In the shaded areas on pages 5 and 6 of the booklet, the department lists the questions that claimants are asked weekly. For most questions, the department instructs claimants to "Answer 'Yes' if ..." However, for Question No. 4, the "During the week, did you work or did you receive or will you receive sick pay, bonus pay or commission?" question, claimants are not instructed to "Answer 'Yes' if they worked for any employer during the week." In fact, claimants are not instructed at all as to how to answer the question. Instead, following the question it states, "If yes, you will be asked if you worked for or receive/will receive sick pay, bonus pay or commission from more than one employer during the week." When a claimant believes that the correct answer to Question No. 4 is "No," the information provided thereafter on p. 6 of the Handbook for Claimants appears to be inapplicable.

Furthermore, contrary to the finding of the ALJ, Question No. 4 on the weekly claim certification is not straightforward. As noted by the employee, it asks a series of questions. Question No. 4 on the weekly claim certification in its current form contains all of the following questions: (1) Did you work; (2) Did you receive sick pay; (3) Will you receive sick pay; (4) Did you receive bonus pay; (5) Will you receive bonus pay; (6) Did you receive commission; and (7) Will you receive commission?(15)

The ALJ's finding that the employee understood that the answers she provided on her weekly claim form pertained to her part-time employer because she provided her vacation pay from that employer on three different occasions is also erroneous. First, the employee provided information about holiday pay, not vacation pay. Second, during the weeks at issue, the employee reported holiday pay twice, not three times. Finally, the employee explained that she provided the holiday pay information to the department because it would otherwise not know that she received additional pay. The department already knew, because the employee had informed the department when she initiated her claim, that she regularly worked part-time hours for the newspaper. The employee's understanding, while mistaken, is not unreasonable for someone who is an inexperienced claims filer.

These circumstances, taken as a whole, do not infer any wrongful intent on the part of the employee. The employee made an honest mistake. "A forfeiture of benefits may not be imposed against a claimant who makes an honest mistake, but only as a wilful act of concealment, not due to ignorance or lack of knowledge. There must be an intent to receive benefits to which the individual knows he or she is not entitled." Brenda R. Mortensen, UI Dec. Hearing No. 05002751JV (LIRC Dec. 14, 2005). Such intent was not present here.

As a result of her mistake, the employee received benefits to which she was not entitled. However, because the employee lacked the fraudulent intent essential to support a finding of concealment, she is eligible for partial unemployment benefits for some of the weeks at issue. 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), provided they do not in any given week work more than 32 hours or earn more than $500.00. Wis. Stat. § 108.05(3)(c) and (d).

The employee's benefit entitlement, and corresponding overpayment, based on the information in Exhibits 1, 3, and 4, is as follows:

 

Week

Hours worked

Wages earned

Benefits paid

Benefits due

Overpayment

20/13

30.9

$360.96

$328

$106

$222

21/13

30.0

$300.91

$328

$146

$182

22/13

32+

Hours +

$328

$0

$328

23/13

32+

Hours +

$328

$0

$328

24/13

32+

Hours +

$328

$0

$328

25/13

32+

Hours +

$328

$0

$328

26/13

32+

Hours +

$328

$0

$328

27/13

32+ (+ hol.)

Hours +

$260

$0

$260

28/13

32+

Hours +

$328

$0

$328

29/13

32+

Hours +

$328

$0

$328

30/13

32+

Hours +

$328

$0

$328

31/13

32+

Hours +

$328

$0

$328

32/13

32+

Hours +

$328

$0

$328

33/13

32+

Hours +

$328

$0

$328

34/13

32+

Hours +

$328

$0

$328

35/13

32+

Hours +

$328

$0

$328

36/13

32+ (+ hol.)

Hours +

$260

$0

$260

37/13

32+

Hours +

$328

$0

$328

38/13

32+

Hours +

$328

$0

$328

39/13

32+

Hours +

$328

$0

$328

40/13

32+

Hours +

$328

$0

$328

41/13

32+

Hours +

$328

$0

$328

42/13

32+

Hours +

$328

$0

$328

43/13

32+

Hours +

$328

$0

$328

 

Total

Overpayment

 

 

$7,484

 

The commission therefore finds that, in weeks 20 through 43 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).

The commission further finds that, pursuant to Wis. Stat. § 108.05(3)(c), the employee was entitled to partial benefits for weeks 20 and 21 of 2013, as set forth above.

The commission further finds that the employee's failure to report work and wages on her weekly claim certifications for weeks 20 through 43 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 $7,484.00 to the department.

DECISION

The appeal tribunal decisions are modified as to the amount of the employee's overpayment and, as modified, affirmed in part and reversed in part. Accordingly, the employee is entitled to partial unemployment benefits for weeks 20 and 21 of 2013, as set forth above. The employee is required to repay the amount of $7,484.00 to the Unemployment Reserve Fund. As a result of this decision, the employee's future unemployment insurance benefit amount and weeks of eligibility shall not be reduced, and there is no concealment overpayment penalty.

Dated and mailed July 31, 2014

smithba_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 employee petitioned for commission review of the adverse appeal tribunal decisions, arguing that she did not conceal information from the department because she thought that she was filing correctly. The employee argued that she did not know that she was doing anything wrong, because she informed the department when she signed up for unemployment insurance benefits that she continued to work for the Journal Sentinel. The employee never hid that fact, even reporting holiday pay as it was received. The employee further argued that she never graduated from high school and had only filed for unemployment benefits once before, nine years earlier, for one month. The employee argued that she has always worked hard her entire life, sometimes two or three jobs, until the bowling alley closed after she had worked there for 27 years. The employee mistakenly understood that her claim for benefits was against the bowling alley, because it was the loss of that job which caused her to file for benefits. The employee wished that someone from either the department or the Journal Sentinel had informed her earlier that she was not filing correctly.

It has long been held that concealment will not be found where a claimant makes an honest mistake, a mistake due to ignorance or lack of knowledge, and will only be found for intentional acts designed to mislead or defraud the department. Here, it was clear that the employee's mistake was due to ignorance or lack of knowledge and not to any wilful design on her part to receive benefits to which she was not entitled. Therefore, while the employee is required to repay the benefits she received to which she was not entitled, she is not required to pay additional penalties.

The commission, in its discretion, asked the ALJ for his demeanor impressions. The ALJ stated that he did not find the employee credible, overall. He found her to be "dodgy." The ALJ did not provide any specifics concerning what it was about the employee's demeanor that influenced him. Instead, the ALJ identified parts of the employee's testimony of which he did not approve. The commission disagrees with the ALJ's assessment of the employee as "dodgy." Rather than being "dodgy," the commission found the employee to be distressed over the length of time it took for her mistake to be discovered and the resulting magnitude of the overpayment for which she is now liable to repay.


cc: JOURNAL SENTINEL INC


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Footnotes:

(1)( Back ) Wis. Stat. 108.04(11)(g)(2011-12, as amended through 2011 Wis. Act 236).

(2)( Back ) Wis. Stat. 108.05(3)(d)(2011-12, as amended through 2011 Wis. Act 236).

(3)( Back ) Wis. Stat. 108.04(11)(a), (b) and (be)(2011-12, as amended through 2011 Wis. Act 236).

(4)( Back ) Wis. Stat. 108.04(11)(bm)(2011-12, as amended through 2011 Wis. Act 236).

(5)( Back ) Wis. Stat. 108.04(11)(bh)(2011-12, as amended through 2011 Wis. Act 236).

(6)( Back ) Wis. Stat. 108.02(11)(2011-12); Kansas City Star Co. v. DILHR, 60 Wis. 2d 591, 602, 211 N.W.2d 488 (1973).

(7)( 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).

(8)( 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).

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

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

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

(12)( 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).

(13)( 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).

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

(15)( Back ) Several years ago, the federal government encouraged states to rid their continued claims scripts of two-part questions, because they confuse claimants and lead to improper payments. See Unemployment Insurance Program Letter (UIPL) No. 19-11, titled National Effort to Reduce Improper Payments in the Unemployment Insurance (UI) Program, U.S. Department of Labor, Employment and Training Administration, June 10, 2011, pp. 4-7. Instead, the department did the opposite and created a multiple-part question, which confuses claimants and leads to improper payments.