AUDWIN SHORT, Claimant
An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued an appeal tribunal decision in this matter. The ALJ held that, when filing weekly claim certifications for weeks 10 through 19 of 2013, the claimant concealed work performed and wages earned. As a result, in addition to an overpayment of $3,490.00 and a concealment overpayment penalty of $523.50 assessed in a companion case, ID No. 130435315,(1) the ALJ concluded that the statutory concealment penalty applied and, therefore, the claimant's future benefit amounts would be reduced by $6,980.00 for benefits and weeks that become payable in the six-year period ending July 13, 2019.
The claimant filed a timely petition for review of the adverse appeal tribunal decision. The claimant requested permission to file a brief, and permission was granted. The commission has considered the claimant's petition and brief, and it has reviewed the evidence submitted to the ALJ.
Based on its review, the commission makes the following:
A de novo hearing was held by the ALJ on February 11, 2014, to address the issue of whether, when filing weekly claim certifications for weeks 10 through 19 of 2013, the claimant concealed work performed and wages earned. Only the claimant appeared at the hearing. No one appeared on behalf of the claimant's employer or the department. During the claimant's testimony, six documents or sets of documents were marked as exhibits by the ALJ and later received into evidence.
Facts Adduced at Hearing
The claimant has been working for a temporary staffing agency since March 2002. His most recent assignment began in March 2013 and continued through September 2013. The claimant began that assignment as a part-time employee, but after a few weeks he started working full-time hours. He was paid $10.50 per hour and was paid on Fridays for the prior week.
Exhibit 1 is an "ADJUDICATORS PRELIMINARY CLAIMANT REPORT," which summarizes the claimant's unemployment claims history. According to the report:
The claimant first filed a claim for unemployment benefits in 1998.
The claimant initiated a new claim for unemployment benefits on January 27, 2012 (week 4). Thereafter, he reported work and wages in weeks 17, 28 through 30, 37, 38, 40, and 44 through 48 of 2012.
The claimant's claim automatically renewed in week 4 of 2013. The claimant filed weekly benefit claims through week 19 of 2013, after which he stopped claiming benefits.
Prior to the department determinations now at issue, the claimant had not been alleged to have failed to report work and wages to the department and had not been specifically warned that his failure to do so would result in penalties.
Exhibit 2 is a weekly earnings audit, which was mailed to the employer on June 21, 2013. The employer reported that the claimant worked in weeks 10 through 24 of 2013.
Exhibit 5 shows the questions asked of the claimant on his weekly claim certifications for weeks 44 through 48 of 2012 and the answers that he provided. The claimant reported work and wages for those weeks. Those claims were filed using the internet. Exhibit 6 shows the questions asked of the claimant on his weekly claim certifications for weeks 10 through 19 of 2013. The claimant did not report work and wages for those weeks. Those claims were filed using the department's telephone interactive voice response (IVR) system.
Exhibit 3 shows that, on January 28, 2012 (week 4); August 28, 2012 (week 12); January 23, 2013 (week 4); and September 17, 2013 (week 37), the department mailed a Claim Confirmation, FORM TYPE 10148, to the claimant. It also shows that on October 18, 2013, FORM TYPE 10148 was sent to the claimant for week 20 of 2013, although week 20 ended on May 18, 2013. Exhibit 3 contains a sample Form UCB-10148, titled "CLAIM CONFIRMATION AND INSTRUCTIONS." The sample explains that, "[i]f this is a new application, this packet includes a handbook (UCB-10) that contains information and instructions about your eligibility for benefits..." Exhibit 4 is a copy of a UCB-10, Handbook for Claimants, with a revision date of January 3, 2014. A copy of the handbook that would have been sent to the claimant in 2012 or 2013, if his were a new application, is not in the record.
The claimant testified that he received a Handbook for Claimants and that he read it. He understood that he was responsible for the information in his unemployment claim and that there would be penalties for deliberately giving false information. He understood that he had to report all work and wages.
When asked by the ALJ why he did not report his work and wages on his weekly claim certifications for weeks 10 through 19 of 2013, the claimant explained that he misunderstood 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 claimant answered "No" because he had not received any sick pay, bonus pay or commission. He thought that he had answered the question correctly and continued to file his claims over the telephone the same way through week 19 of 2013, the week ending May 11, 2013, after which he stopped claiming benefits. The claimant stopped filing claims because he was consistently receiving nearly full-time hours each week. He had previously been told to keep filing even though he was working, because otherwise his claim would lapse. Because the claimant worked for a temporary staffing agency, he was never sure when his hours would drop or an assignment would end.
The claimant testified that he did not realize that he was receiving full unemployment benefit payments beginning in week 10 of 2013 because he had lost his access to the internet in or about February 2013. The reason he was filing his weekly claims using the telephone IVR system rather than filing online was because he had lost his internet access. The claimant's bank statements are not mailed to him and can only be accessed online.(2) The claimant's paychecks were directly deposited to his account, and he used a debit card to make purchases.
The claimant did not learn that he had failed to report his work and wages to the department until July 2013, when he received a letter from the department.
Exhibit 7A is a copy of a letter dated July 9, 2013, sent to the claimant to notify him of his claiming errors. Exhibit 7B is a summary of the conversation the claimant had with an adjudicator in response to the July 9 letter. The claimant explained that he filed some of his claims on the phone and thought that he misunderstood the questions asked of him.
The issues to be decided are whether the claimant, when filing claim certifications for weeks 10 through 19 of 2013, concealed work performed and wages earned from the department 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."(3)
A claimant who conceals work performed or wages earned when filing a weekly claim certification is ineligible to receive benefits for the week claimed.(4) 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.(5) This ineligibility is applied against benefits and weeks of eligibility for which the claimant would otherwise be eligible after the week of concealment.(6) 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.(7)
A claimant is presumed eligible for unemployment insurance benefits, and the party resisting payment must prove disqualification.(8) The burden to establish that a claimant concealed information is on the department.(9) As a form of fraud, concealment must be proven by clear, satisfactory, and convincing evidence.(10)
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."(11) 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.(12) As a result, concealment will not be found where a claimant makes an honest mistake or misinterprets information received from the department.(13) Concealment requires an intent or design to receive benefits to which the claimant knows he or she is not entitled.(14)
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.(15)
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.(16)
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.
Exhibit 6 established that the claimant filed claim certifications for weeks 10 of 2013 through 19 of 2013 via telephone. On each of the certifications, the claimant 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?"
Exhibit 2, together with the testimony of the claimant, established that the claimant did, in fact, work and earn wages in weeks 10 through 19 of 2013. The claimant agreed that he worked in those weeks but, because he did not answer Question No. 4 on the weekly claims certification correctly, he was not prompted to, and did not, report any wages earned in those weeks. The claimant did not object to having to repay the benefits he received for those weeks and did not appeal that issue. It was only the concealment finding that he appealed.
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). However, pursuant to Wis. Stat. § 108.05(3)(c), a claimant is ineligible to receive unemployment benefits for any week in which the claimant performs work for 32 or more hours. Exhibit 2 shows that the claimant worked between 24 and 40 hours per week in weeks 10 through 19 of 2013, and Exhibit 1 shows that the claimant received full benefit payments for those weeks.
The record, therefore, supports findings that the claimant filed claim certifications for weeks 10 through 19 of 2013; that he provided incorrect information on those claims; and that, as a result of the incorrect information, he received benefits to which he 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 claimant's incorrect answer to Question No. 4, without more, is insufficient evidence from which to infer an intent to mislead or defraud the department. See, also, 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 on the department's weekly claim certification 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 over time. The commission's 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 the mailing of after-the-fact statements noting questions asked, answers given, and amounts deposited.
In this case, the claimant has a long history of filing claims for unemployment benefits. There is no indication that he was ever previously alleged to have concealed information from the department. The claimant correctly answered Question No. 4 on his weekly claim certifications for weeks 44 through 48 of 2012 when he filed his claim certifications online. It was only after the claimant switched to filing his claim certifications using the telephone that he answered Question No. 4 incorrectly. He filed weekly claim certifications for weeks 10 through 19 of 2013 using the department's telephone system before he stopped filing because he was consistently working close to 40 hours per week. These circumstances, taken as a whole, do not lead the commission to infer any wrongful intent on the part of the claimant. Instead, the circumstances cause the commission to find that the claimant made an honest mistake.
As stated by the ALJ in her appeal tribunal decision, "[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.
The commission therefore finds that, in weeks 10 through 19 of 2013, the claimant worked and earned wages, but he 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 appeal tribunal decision is reversed. Accordingly, the claimant's benefit amount shall not be reduced by $6,980.00 for benefits and weeks for which the claimant would otherwise be eligible during the six-year period that ends July 13, 2019.
Pursuant to authority granted in Wis. Stat. § 108.09(6)(c) and (d),(17) the commission sets aside the department's determination (ID No. 130435315) dated July 16, 2013, concerning weeks 10 through 19 of 2013, on the grounds of mistake, and orders the department to issue an amended determination consistent with the commission's finding that the claimant did not conceal, as that term is defined in Wis. Stat. § 108.04(11)(g), work and wages from the department. The amount of the overpayment shall be reduced for partial benefits due for week 16 of 2013, and there shall be no concealment overpayment penalty.
Dated and mailed July 10, 2014
shortauurr . doc : 152 : BR 330
BY THE COMMISSION:
/s/ Laurie R. McCallum, Chairperson
/s/ C. William Jordahl, Commissioner
/s/ David B. Falstad, Commissioner
The claimant petitioned for commission review of the adverse appeal tribunal decision because he did not think that he was treated fairly during his hearing or that the ALJ did not accurately view his statements. The claimant argues that he was never given the chance to explain his side or direct any explanations toward the ALJ's concerns. He asked, "How can one defend himself against the accusation of intent when the explanations aren't allowed or listened to?" The claimant argues that the ALJ's use of the term "auto-pilot" portrayed him as careless, when he actually meant that, because he thought that he was filing properly, he consistently filed the same way. Any errors he made were unintentional. The claimant argued that the phone system, which he used in weeks 10 through 19 of 2013 but had not used in years, was the source of his errors. The commission agrees.
The claimant established that he made an honest mistake in answering Question No. 4 on his weekly claim certifications. The last part of the multiple-part question that he heard was "Did you receive or will you receive sick pay, bonus pay, or commission?" The claimant had not received, and would not receive, those forms of remuneration, so he answered the question in the negative. The claimant believed that he had answered the question correctly and answered the question the same way until he stopped filing after week 19 of 2013. The fact that the claimant stopped filing claims for benefits after week 19 of 2013 is found to be indicative of his good faith. If the claimant intended to defraud the department, he could have kept claiming benefits while working until the department detected his ineligibility. He did not do so.
Since at least 2011, the federal government has encouraged states to rid their continued claims scripts of two-part questions because they confuse claimants and lead to improper payments. See, e.g., Unemployment Insurance Program Letter (UIPL) No. 19-11, 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, and UIPL No. 17-14, Revised Employment and Training (ET) Handbook No. 336, 18th Edition: "Unemployment Insurance (UI) State Quality Service Plan (SQSP) Planning and Reporting Guidelines," U.S. Department of Labor, Employment and Training Administration, July 7, 2014, Appendix V, p. 2. The department has not done so. Rather, in October 2012, the department changed its previous Question No. 4 - "Did you work? - to its current form - "During the week, did you work or did you receive or will you receive sick pay, bonus pay or commission?
The commission, in its discretion, asked the ALJ for her impressions of the claimant's demeanor. The ALJ stated that she found the claimant "only partially credible" based on his demeanor and overall behavior in the hearing. The ALJ did not provide any specifics concerning what it was about the claimant's demeanor or behavior that influenced her. Instead, the ALJ merely identified which parts of the claimant's testimony she believed and which parts she did not. This is of no benefit to the commission.
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(1)( Back ) The claimant withdrew his appeal of the companion determination and a decision was entered accordingly on January 9, 2014, in Hearing No. 13609851MW.
(2)( Back ) The commission notes that the department no longer sends advices to claimants notifying them of deposits made to their accounts.
(3)( Back ) Wis. Stat. § 108.04(11)(g)(2011-12, as amended through 2011 Wis. Act 236).
(4)( Back ) Wis. Stat. § 108.05(3)(d)(2011-12, as amended through 2011 Wis. Act 236).
(5)( Back ) Wis. Stat. § 108.04(11)(a), (b) and (be)(2011-12, as amended through 2011 Wis. Act 236).
(6)( Back ) Wis. Stat. § 108.04(11)(bm)(2011-12, as amended through 2011 Wis. Act 236).
(7)( Back ) Wis. Stat. § 108.04(11)(bh)(2011-12, as amended through 2011 Wis. Act 236).
(8)( 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).
(9)( 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).
(10)( 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).
(11)( Back ) Princess House, Inc. v. DILHR, 111 Wis. 2d 46, 62, 330 N.W.2d 169 (1983).
(12)( Back ) Liberty Loan Corp. & Affiliates v. Eis, 69 Wis. 2d 642, 649, 230 N.W.2d 617 (1975).
(13)( Back ) In re Joseph Hein, Jr., UI Dec. Hearing No. 00605374MW (LIRC Dec. 13, 2001); In re Scott Lynch, supra.
(14)( 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).
(15)( 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).
(16)( Back ) In re Leonard Miszewski, UI Dec. Hearing No. 12401605AP (LIRC Nov. 30, 2012).
(17)( Back ) Wisconsin Stat. § 108.09(6)(c) provides that, for reasons it deems sufficient, the commission may set aside any final determination of the department or appeal tribunal or commission decision within two years from the date thereof upon grounds of mistake or newly discovered evidence and take action under par. (d). Wisconsin Stat. § 108.09(6)(d) provides that the commission may affirm, reverse, modify or set aside the 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.