JULIE A FERA, Employee
SOUTH EAST CABLE LLC, Employer
On September 12, 2013, the department issued a determination (ID: 130656414), in which a deputy found that, in weeks 1 through 13, 18, and 27 through 52 of 2009 and in week 1 of 2010, the employee worked and did not report her wages. The employee was found to have concealed her work and wages and, therefore, was found to be ineligible for benefits in those weeks, pursuant to Wis. Stat.
§ 108.04(11)(b). The effect of the determination was that the employee was overpaid benefits of $12,280.00, which she was required to repay.
On September 12, 2013, the department issued a second determination (ID: 130656484), in which the same deputy found that that the employee performed work for South East Cable and earned wages during the weeks ending January 3, 2009 (week 1), through January 2, 2010 (week 1), but indicated on the weekly certification that she did not work. (Specific weeks were not identified.) As a result, the employee was found to have concealed work performed and wages earned and/or a material fact relating to her eligibility for benefits. The effect of the determination was that the employee had to forfeit $12,587.00 in unemployment benefits that become payable by September 7, 2019.
The employee filed a timely request for hearing. An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development held a combined de novo hearing on October 21, 2013, to address the issues raised in the initial determinations.
On October 23, 2013, in Hearing No. 13607375MW, the ALJ affirmed the department's first determination (ID: 130656414) and found that the employee worked and earned wages in week 1 of 2009 through week 1 of 2010 and concealed those wages from the department. As a result, the employee was found to be ineligible for benefits in 41 weeks and was found to have been overpaid benefits of $12,280.00. The employee was required to repay those benefits to the Unemployment Reserve Fund.
On October 23, 2013, in Hearing No. 13607376MW, the ALJ reversed the department's second determination (ID: 130656484) and found that the employee did not intentionally conceal any information from the department. The ALJ explained in her appeal tribunal decision that she was persuaded that the employee believed that she was not required to report her work and wages on her weekly claim certifications as the employee believed herself to be an independent contractor. The ALJ wrote that, "[u]nder the circumstances, the employee did not intentionally conceal a material fact from the department during those weeks in question." As a result, the employee was not required to forfeit $12,587.00 in unemployment benefits that become payable by September 7, 2019.
Wisconsin Stat. § 108.04(6)(a) provides that the department or any party may petition for commission review of an appeal tribunal decision within 21 days of the date of mailing. No petitions for commission review of the October 23, 2013, appeal tribunal decisions were filed. Accordingly, those decisions became final.
However, on February 6, 2014, the ALJ reissued an appeal tribunal decision in Hearing No. 13607376MW. In that decision, the ALJ explained that the October 23, 2013, decision was being set aside under Wis. Stat. § 108.09(4)(f)2.a. on the grounds that "a technical error was made in the prior appeal tribunal decision." In the reissued decision, the ALJ "corrected" her earlier finding that the employee had not intentionally concealed work and wages or a material fact from the department in the weeks at issue. Based on the same hearing record, the ALJ made new factual findings and conclusions of law. The ALJ found that the employee intentionally concealed wages from the department or, in the alternative, concealed self-employment from the department in the weeks at issue. The ALJ affirmed the department's initial determination (ID: 130656484), and, as a result, the employee was required to forfeit $12,587.00 in unemployment benefits that become payable by September 7, 2019.
The employee filed a timely petition for commission review of the February 6, 2014, appeal tribunal decision. In any case before the commission, the commission may affirm, reverse, modify or set aside the appeal tribunal decision on the basis of the evidence previously submitted, may order the taking of additional evidence, or may remand the matter to the department for further proceedings. Wis. Stat. § 108.09(6)(d).
ALJ's February 6, 2014, Appeal Tribunal Decision
Wisconsin Stat. § 108.09(4)(f)2.a. provides that an appeal tribunal may amend or set aside its decision at any time, if a timely petition for commission review has not been filed, because a technical or clerical mistake has occurred. "Technical" is used to describe an insignificant or trifling error. See State v. Carlson, 2002 WI App 44, 24, fn. 8, 250 Wis. 2d 562, 641 N.W.2d 451 (2001). A technical error is a harmless error; an error that does not affect a party's substantive rights or the case's outcome. Black's Law Dictionary, Ninth Edition. See, also, Gaddis v. LaCrosse Products, Inc., 198 Wis. 2d 396, 403, 542 N.W.2d 454 (1996), citing American Family Mut. Ins. v. Royal Ins. Co., 167 Wis. 2d 524, 530-32, 481 N.W.2d 629 (1992); State v. Stevens, 26 Wis. 2d 451, 457 (1965).
Although the ALJ found that a technical error had occurred with respect to her original decision issued on October 23, 2013, in Hearing No. 13607376MW, the "error" identified by the ALJ cannot be fairly characterized as a technical error. The ALJ's "technical error" was the issuance of two conflicting appeal tribunal decisions arising out of a single hearing concerning whether the employee concealed work and wages from the department. The ALJ's "correction" clearly affected the employee's substantive rights and the outcome of the case. Therefore, because the error the ALJ attempted to correct was not merely a "technical error," the ALJ did not have in February 2014 the statutory authority under Wis. Stat. § 108.09(4)(f)2.a., or any other statute, to set aside her October 23, 2013, decision in Hearing No. 13607376MW. See, e.g., Garner v. Professional Services Group Inc., UI Dec. Hearing No. 11602744MW (LIRC July 22, 2011); Kolka v. FedEx Corporate Services Inc., UI Dec. Hearing No. 10200307EC (LIRC July 29, 2010). The ALJ's February 6, 2014, decision in Hearing No. 13607376MW is set aside.
Because the ALJ's February 6, 2014, appeal tribunal decision is set aside, the ALJ's decisions for the weeks at issue are in conflict, despite being based on the same record. Therefore, the commission exercises its authority under Wis. Stat. § 108.09(6)(c)(1) to review the companion case, Hearing No. 13607375MW, along with the case before it, Hearing No. 13607376MW.
The commission has considered the employee's petition, and it has reviewed the record created in Hearing Nos. 13607375MW and 13607376MW. Based on its review, the commission makes the following:
A de novo hearing was held on October 21, 2013, to address the issues of whether the employee worked and earned wages in week 1 of 2009 through week 1 of 2010, and/or whether she concealed from the department wages earned or any material fact from the department when filing for benefits during that time period. Only the employee appeared at the hearing. No one appeared to provide testimony on behalf of the named employer or the department. During the employee's testimony, three documents were marked as exhibits by the ALJ and later received into evidence.
Facts Adduced at Hearing
The employee lost her job as a customer service representative in July 2008 and thereafter began filing for unemployment insurance benefits. She received a Handbook for Claimants. She may not have read through the booklet before filing for benefits. The employee filed her claims over the telephone and remembered filing quick claims. Copies of the employee's weekly claim certifications (DUCQ screens) were not introduced at the hearing and, therefore, are not in the record.
The employee testified that she began performing services for the named employer in June or July 2009. She picked up cable boxes that people did not return to the cable company. The employee could not recall in which weeks she picked up cable boxes. She did not work throughout 2009. The employee was paid bi-weekly by personal check from the owner of South East Cable LLC. She cashed the checks she received at the owner's bank. The employee did not speak with anyone at the department about how to report the money she received from performing services for South East Cable LLC because it was difficult to get through to a department representative. Many people were claiming unemployment benefits in 2009. The employee did not consider the money she received from the named employer to be wages, because she had been told by the owner of South East Cable LLC and others who worked for him that she was an independent contractor.
The dates of the checks the employee received from the owner of South East Cable LLC and the time periods they covered are not in the record. The employee did not have pay stubs or any other documents. No wage records from the named employer or quarterly wage reports from the department were introduced at the hearing to establish that the employee had earned wages during any specific time period in 2009. There is no wage information in the record apart from that testified to or provided by the employee. The employee provided a copy of an IRS Form 1099 she received from South East Cable LLC for 2009. The employee reported the 1099 income on her taxes for 2009 as gross business receipts.
The employee stopped performing services for the named employer on or about December 28, 2009. She received her last check from the owner of the business in January 2010.
Issues
The issues to be decided are whether the employee worked and earned wages in weeks 1 of 2009 through 1 of 2010, whether she concealed her work and wages for those weeks, 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."(2)
A claimant who conceals work performed or wages earned when filing a weekly claim certification is ineligible to receive benefits for the week claimed.(3) 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.(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) As 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 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.(15)
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
In this case, despite the fact that the department has the burden to prove by clear, convincing, and satisfactory evidence that a claimant concealed information in order to obtain unemployment benefits to which the claimant was not entitled, no evidence was introduced or received at the de novo hearing to establish:
(1) that the employee worked in any specific weeks;
(2) that the employee earned wages in any specific weeks;
(3) that the employee filed claim certifications for any specific weeks;
(4) that the employee provided incorrect information on any certifications; or
(5) that the employee received benefits for any specific weeks.
The ALJ found that the employee worked and earned wages in week 1 of 2009 through week 1 of 2010 and found that the employee concealed that work and those wages on her weekly claim certifications for 41 weeks. The ALJ further found that the employee was paid $12,280.00 in unemployment insurance benefits to which she was not entitled. There is no evidentiary basis for these findings in the record.
According to the employee's testimony, at most there could have been 30 weeks at issue. However, because it was not established in which weeks the employee filed claims during 2009 and in which weeks she worked during 2009, there is insufficient evidence upon which to find that the employee provided incorrect information to the department. Likewise, there is insufficient evidence upon which to find that the employee failed to report on her weekly claim certifications that she was self-employed. The employee's claim certifications are not part of the record. No department records were introduced showing the amount of benefits paid to the employee during the relevant time period, and the employee did not testify as to any benefits she may have received.
The commission therefore finds that the department has not proven by clear, satisfactory, and convincing evidence that the employee concealed information from the department in week 1 of 2009 through 1 of 2010, within the meaning of Wis. Stat. § 108.04(11), because the department failed to establish that the employee filed a claim for any specific week, that she provided incorrect information to the department when filing a claim for any specific week, or that benefits were improperly paid to her for any specific week.
The appeal tribunal decision in Hearing No. 13607375MW dated October 23, 2013, is reversed. As a result of this decision, there is no overpayment.
The appeal tribunal decision in Hearing No. 13607376MW dated October 23, 2013, is affirmed. As a result of this decision, the employee is not required to forfeit $12,587.00 in future benefits.
Date and mailed July 31, 2014
feraju_urr . doc : 152 : PC 715 : PC 749 : BR 317 : BR 330
BY THE COMMISSION:
/s/ Laurie R. McCallum, Chairperson
/s/ C. William Jordahl, Commissioner
/s/ David B. Falstad, Commissioner
The employee petitioned for commission review of the February 6, 2014, appeal tribunal decision issued by the ALJ in this matter. For the reasons stated in the decision above, the commission set that appeal tribunal decision aside and addressed the underlying merits in this matter.(16)
The commission did not consult with the ALJ before reversing her October 23, 2013, appeal tribunal decision, because the reversal was not based on a differing view as to the credibility of witnesses whose testimony conflicted. Instead, the reversal was based on the insufficient evidentiary record in this matter.
cc:
FLEMING LAW OFFICE
ATTN: MICHAEL W FLEMING
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