Recent LIRC decisions show that concealment charges are often outside the law

In January 2014, the Labor and Industry Review Commission issued three decisions about concealment. In all three, the Commission overturned decisions of administrative law judges that had affirmed initial determinations. In reading these, it is apparent that the Department of Workforce Development is basing many of its concealment allegations on little more than mere mistakes by claimants.

What is most troubling about the decisions described below is that these basis mistakes in how to apply unemployment law are only being corrected by the Commission. Not only are claim adjudicators getting basic issues wrong, but administrative law judges seem determined to apply the same erroneous standards as the claim adjudicators. It takes someone appealing a decision all the way to the Commission to finally get the basic legal standard for concealment applied to his or her case. Something is very wrong with the Department and unemployment cases in general when only the Commission is following the law.

“Did you work or will you receive sick pay, bonus pay, or commission?”
In Henning, the claimant had been filing for partial unemployment since May 2011. In October 2012 (week 43), the Department changed one of the questions on the weekly claim certification from “Did you work?” to “Did you work or will you receive sick pay, bonus pay, or commission?” With this new question, the claimant stopped answering yes as she was not earning sick pay, etc. As a result, her part-time work went un-reported on her weekly claims.

The Department did not catch this problem until late July 2013 — almost a year later. The Department issued two determinations: one finding that prior unemployment benefits had to repaid along with a concealment penalty and another instituting a penalty on future unemployment benefits. The administrative law judge affirmed after a hearing.

The Commission found otherwise:

The evidence in the record does not support a conclusion that the employee intentionally replied “no” to both parts of the modified question. The former question was straightforward and not easily susceptible to misinterpretation. The modified version presents two distinct alternative questions within one compound question. There are inherent dangers in inviting an answer to a compound question. It is often not possible to be certain to which part, or parts, a single response applies.

Finally, the standard in concealment cases is not that applied by the ALJ: whether the employee could establish a reasonable explanation for her mistake. The standard in concealment cases is whether there is substantial and persuasive evidence of an intent or design by the claimant to receive benefits to which the claimant knows he or she is not entitled. Here, evidence to support a conclusion that, in making the claims for benefits for the weeks at issue, the employee intentionally misled or defrauded the department by withholding or hiding information or making a false statement in order to receive benefits to which the employee knew she was not entitled is absent.

In Harris, confusion over this question was also at issue. In this case, only two weeks were at stake. The Commission found that there was no actual intent in the record to deceive the Department, and so overturned the decisions of the Department and administrative law judge finding that concealment had occurred.

The mistakes in these cases are about an ambiguous question being asked of claimants. The Commission here is simply pointing out that an answer to an ambiguous question is not proof of actual deception. The Department apparently thinks otherwise. What is especially troubling, however, is when there is clear evidence of a mistake and both the Department and administrative law judge go out of their way to find concealment anyway.

When claimants are apparently always wrong
In Bilton, the claimant was working as a tax preparer when she took a new job. As her hours and pay were not clear to her during the first few weeks she worked for the new employer, her weekly claim certifications did not coincide with what her employer reported. Two and five months later, the Department issued two determinations finding concealment, over-payments that had to be repaid, a concealment penalty, and a penalty on future unemployment benefits.

At her hearing, the claimant started to testify about how a prior employer of hers did not pay for training and that she thought training with the new employer was likewise unpaid. The administrative law judge cut off this testimony as too remote in time from the training at issue with the new employer. Other testimony about her training with the new employer was not refuted and it was also unclear from the hearing exactly where the earnings at issue came from. Nevertheless, the administrative law judge summarily affirmed the concealment determinations. According to the ALJ, the burden was on the claimant to report her wages and work in sufficient detail to the Department to avoid a finding of concealment.

The Commission, on the hand, found the whole concealment allegation to be hogwash. Both employee and employer reinforced an impression that the training was unpaid (however illegal that is). Furthermore, the Commission observed:

the department’s Disputed Claims Manual provides that there is no concealment issue and no fraud investigation required when the claimant fails to report income on the weekly claim certification and notifies the department of such failure within 14 days following the date the certification was filed. When an investigation establishes that a claimant gave a false answer, two examples of acts that are not considered concealment are “[p]aid training not reported because claimant did not consider this to be work and wages” and “[c]laimant believes their work or labor is donated and is paid unexpectedly.” It is not clear from the record in this case how the employee’s actions with respect to weeks 4 and 5 of 2013 differ from these examples.

In other words, despite clear direction from a disputed claims manual that there was no concealment at issue here, both an adjudicator and an administrative law judge found concealment had occurred.

Basic case-handling mistakes by the Department
These decisions also reveal some basic problems in how the Department is processing claims. In Bilton, the concealment determinations were issued separately and three months apart from each other. In Henning, the Department did not issue determinations until nearly a year later. Furthermore, the concealment determinations in Henning inexplicably did not cover all weeks in question, but only alleged concealment for weeks in 2013 and no concealment in 2012 despite the alleged concealment starting in week 43 of 2012. “This disparate treatment,” the Commission noted, “was not explained.”

By itself, this sloppy case-handling is just that. But, as claimants must also rely on Department agents to provide clear and sound advice about what they should do, this sloppy case-handling can lead to serious problems for claimants who think they can rely on the Department to accurately record all of their interactions with Department personnel.

In Bilton, there was a question of when the claimant tried to contact the Department for information about how to report her weekly claim certification. The administrative law judge apparently considered departmental records as conclusive evidence that trump actual hearing testimony. Accordingly, the Commission had to reiterate in that case that departmental records are only hearsay.

The employee testified that, when she received the unexpected payroll check, she contacted the department. The employee’s statements concerning what was said in the conversations she had with the department were not inherently incredible. Comments typed into the departments computer system concerning what was said, or what was not said, are hearsay. No one testified on behalf of the department. Uncorroborated hearsay alone does not constitute substantial evidence.

As Department agents only record information in computer systems when taking action of some kind, it is unremarkable that an agent would not record a phone call from a claimant if the agent did nothing or advised a claimant to take some kind of action on his or her own (such as reporting the income at issue in a subsequent week). Because the Department’s policy is to only record issues in its computer systems when action is taken or some issue has arisen that the agent believes is relevant, there are usually no records for when Department agents make mistakes and provide wrong advice or mis-perceive something a claimant says as harmless or unimportant. Until the Department institutes a policy that all interactions need to be recorded, claimants simply cannot rely on departmental records to show an actual history of communication for their unemployment claims.