LIRC responds to DWD’s concealment agenda

At the 16 April 2015 Advisory Council meeting, the Labor and Industry Review Commission provided memoranda regarding potential legal problems with the Department of Workforce Development’s proposed legal changes.

My post yesterday discussed the Commission’s memorandum regarding the Department’s SSDI proposals. Today, the issue is the Department’s push to label everyday mistakes as concealment, previously noted in these posts regarding employees and employers.

Along with the cover letter explaining why these memoranda were drafted, the Commission presented to council members a memorandum regarding the Department’s latest concealment proposal, D15-08. The Commission’s memorandum is a thorough debunking of the Department’s rationale and alleged scope for its proposed changes to concealment.

But, before reviewing this memorandum, it is important to understand what is going on here between the Commission and the Department. Luckily, the Department provided the Advisory Council with some data on this subject.

LIRC concealment/fraud decisions
Year Total ATD found fraud; LIRC reversed ATD found fraud; LIRC affirmed ATD found no fraud; LIRC affirmed Remand for add’l evidence
2015 44 14 23 3 4
2014 196 123 28 6 39
2013 147 25 77 34 11
2015 data only from January through 12 April 2015

These numbers reveal that two big shifts in concealment cases took place in 2014. First, the number of cases where appeal tribunals found no fraud declined markedly from 2013 to 2014 — going from 34 cases to only 6 — even though the total number of concealment cases increased. Second, the number of concealment cases being reversed by the Commission jumped significantly in 2014. In 2013, the Commission only reversed 25 appeal tribunals who found concealment. But, in 2014 nearly five times as many determinations — 123 — were reversed by the Commission. Now, this huge increase is partially explained by the fact that concealment cases usually involve multiple determinations. So, when the Commission reverses a concealment case, two to three initial determinations are usually at issue in that concealment case.

But, these numbers also show that in 2014 appeal tribunals were moving in the opposite direction to the Commission. The Department and the administrative law judges who issue appeal tribunal decisions seem to be finding concealment in circumstances that everyone agreed in 2013 was not concealment. Indeed, as the Commission’s decisions in 2014 reveal (see these posts), the Department and appeal tribunals are finding concealment in circumstances where only honest mistakes are being made.

The Department has not acknowledged this change in direction. Indeed, as described by the Commission in its memorandum, the Department has actively attempted to pretend that no change in concealment law has even occurred and has even implied to the Advisory Council that it is winning circuit court cases in reviewing the Commission’s concealment decisions. At the 19 March 2015 council meeting, for instance, the Department informed council members that a Dane County circuit court had already reversed one concealment decision by the Commission. As a result, the Commission’s memorandum also seeks to set the record straight to council members about what is actually happening with all of these concealment court challenges by the Department.

As described in the memorandum reviewing the history of unemployment concealment in Wisconsin, the Commission notes that five 2014 cases appealed by the Department have already led to courts affirming the Commission decisions at issue. See Commission concealment memorandum at 4. And, the Dane County case previously described by the Department as a reversal of a Commission decision was actually a remand because an “unnecessary” factual scenario, according to the judge, was not addressed in the Commission decision and the Department chose remand to address that issue rather than have the decision simply affirmed. See id. at n.9.

Understandably, the Department was not happy to have this memorandum in the hands of council members, and at the April 16th meeting Janell Knutson lashed out at the Commission for providing political analysis in place of legal reasoning. In addition, Scott Manley, WMC vice-president, publicly endorsed this view. As a result, the Commission’s memorandum may not lead to changes or a rejection of the Department’s proposed new definition of concealment. Even if the council takes no action on the Department’s proposed changes to concealment, this change may end up being added to the current budget bill just as the Department’s proposed substantial fault standard was added to the state budget after being rejected by the Advisory Council. See this prior post.

Still, the Commission’s memorandum is an excellent introduction to the issue of unemployment concealment and fraud. The memorandum not only details the flaws in the Department’s proposal — how the proposal mis-characterizes Commission decisions, mis-states the original intent of the concealment definition, runs contrary to information given to claimants and adjudicators, conflicts with federal fraud measures and standards, leads to fraud penalties for honest mistakes, and does nothing to stop improper payments before they occur — but it also offers an excellent description of the history of how the concealment definition was developed and applied. Anyone interested in unemployment law should read the Commission’s memorandum.

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SSDI benefits and unemployment

In 2012, the Department of Workforce Development introduced numerous proposed changes to unemployment law, and one of those proposals, D12-05, sought to ban recipients of Social Security Disability Income (SSDI) from receiving unemployment benefits.

After back and forth between the members of the Advisory Council and the Department, a new version of the Department’s proposed ban on unemployment benefits when receiving SSDI benefits was drafted, supported by the council, and passed by the legislature.

In 2014, however, the Labor and Industry Review Commission found that the actual statutory language did not accomplish what the Department intended and held that the ban on receiving unemployment benefits only applied for the week in which a person’s monthly SSDI benefits were paid. Since then, the Department has appealed each and every Commission decision allowing claimants receiving SSDI benefits to continue receiving some unemployment benefits (about eleven such cases in total). An amicus brief being filed in some of these circuit court cases has the details about these events and issues.

This amicus brief also demonstrates the fundamental flaw in the Department’s push to keep SSDI recipients from receiving unemployment benefits, namely the Department’s presumption that SSDI recipients do not work and leave the labor market. As detailed in this amicus brief, not only do folks receiving SSDI benefits continue to work in numerous kinds of jobs, they are also encouraged to do so.

Undeterred, the Department explained at the 19 February 2015 Advisory Council meeting that a proposal for eliminating all unemployment eligibility for those receiving SSDI benefits was being developed. At the 19 March 2015 council meeting, the Department presented this new language in D15-01 to make the ban on unemployment eligibility apply to all weeks SSDI recipients receive unemployment benefits.

To establish why this new and total ban was needed, the Department informed council members that in January 2014, when the first ban on unemployment eligibility for SSDI recipients was instituted, 687 claimants were immediately disqualified because they notified the Department that month that they were receiving SSDI benefits. This 687 number bears repeating: the SSDI ban as implemented by the Department stopped unemployment benefits for nearly 700 claimants. And, only eleven or so claimants who appealed their cases to the Commission managed to retain some eligibility.

The Department’s recently released Financial Outlook Report at p.34 shows the financial impact this ban on unemployment benefits for SSDI recipients has had: nearly $1.5 million annually is not being paid to claimants based on the work they have performed the previous year.

Staffers in the Secretary’s office of DWD recently asked the Commission to identify possible legal problems in the Department’s unemployment proposals. The Commission did so, and reported to the Advisory Council the problems with the Department’s SSDI proposals arising from the Commission’s legal analysis. The Commission’s memo reveals three basic problems with the Department’s SSDI efforts:

  • a total ban on unemployment eligibility discriminates against the disabled
  • a ban on unemployment eligibility because of disability is inconsistent with other provisions of unemployment law
  • a complete ban on unemployment eligibility is far too broad relative to the income and eligibility of many if not most individual claimants

In response, at the April 2015 council meeting the Department lambasted the Commission’s memorandum as driven by a political agenda rather than legal analysis. Scott Manley, WMC vice-president, chimed in to endorse the Department’s criticism of the Commission’s “political” opinions. These conclusions were especially remarkable when the Commission’s memorandum represents the first time that council members were presented with the Kluczynski decision at issue in these SSDI cases.

The Advisory Council, however, apparently accepted the Department’s conclusion about SSDI benefits. After the members caucused, they indicated that they approved of the newly proposed statutory language in D15-01 and that the Department could go ahead and present this proposal to the legislature.

Concealment problems for employers too

In yesterday’s post, I described how the Department of Workforce Development is turning employees’ claim-filing mistakes into charges of fraud and concealment.  Employers should not think that these new tactics have nothing to do with them, however.

In a case of first impression I recently litigated, the Department charged an employer with aiding and abetting claimant fraud. There were small and big holes to the Department’s case, and the appeal tribunal dismissed the charges. Furthermore, the Department has not appealed these dismissals to the Labor and Industry Review Commission. So, the appeal tribunal decisions dismissing the cases stand.

The facts of the case were that an employee of a truck driving company was let go after an OUI arrest and charge that made the employee ineligible to drive trucks. After the former employee started serving his sentence, the employer arranged for the former employee to do work about the employer’s house as a household employee through the former employee’s Huber release privilege. As the employer did not operate as a household company, it fudged the needed Huber release documents and listed the trucking company as the Huber release employer. Unknown to the employer, the former employee filed unemployment claims while on Huber release and did not report his earnings from the household work.

What was striking about these aiding and abetting charges is that the Department never alleged that the employer here knew about the claimant fraud at issue or that the employer was somehow involved in the claimant’s concealment scheme. Rather, as the administrative law judge explained:

One of the department’s witness, a UI benefit analyst, admitted that the department’s determination, which found that the employing unit had aided and abetted the claimant in unemployment insurance fraud, was not based upon the assertion that the employing unit actually knew the claimant was filing for U1 benefits, but that it was based upon the employing unit’s alleged failure to respond and provide information to the department that constituted aiding and abetting.

In essence, the employer in this case was charged with aiding and abetting claimant fraud for making a reporting error to the Department.  This “aiding and abetting” subjected this employer: (1) to repaying the claimant’s fraud of $5,202 on top of the claimant’s own obligation to repay the $5,202 because of his own concealment and (2) to paying an additional penalty of $8,500 — $500 for each of the claimant’s 17 acts/weeks of concealment . According to the Department in its brief:

In the instant matter, if the department had received only the wage earnings audits completed by Ms. __, CLAIMANT’s work and wages would have remained concealed. By not reporting the work that CLAIMANT performed for EMPLOYER, the employer was attempting to aid and abet CLAIMANT in concealing his wages.
* * *
The wage earnings audit forms are clear. The forms completed by Ms. __ evince more than a simple mistake of fact. The Labor and Industry Review Commission has stated with respect to concealment cases that: “[b]ecause 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.” McCleron v. Olson Carpet Tile and Design LLC, Hearing Nos. 13609472MW and 13609473 (LIRC, April 30, 2014).

For the Department, the employer’s alleged failure to provide wage information about the claimant in a departmental audit form constituted aiding and abetting claimant fraud. The problem with this kind of allegation is that an employer’s failure to report information to the Department in a timely fashion is already penalized by the Department. As I wrote in my brief to the appeal tribunal (footnotes removed):

Depending upon whether the benefits were erroneously paid due to fault by “the employer” or “an employer” Wis. Stats. § 108.04(13)(c) imposes different consequences upon an employee who is without fault in the erroneous payment of benefits. If the at issue employer is at fault in the erroneous payment and the employee is without fault, the benefits will be referred to as erroneously paid but will “stand as paid” with no overpayment for the employee to repay. On the other hand, if the at issue employer is not at fault but a different employer is at fault, an overpayment will be created and the employee is responsible for repaying the overpayment pursuant to Wis. Stat. § 108.22(8)(c) even though the employee is without fault. Further, under the latter scenario, the “at fault” employer, will be charged for the benefits erroneously paid and will not be credited those amounts if department recovers the overpayment. See Wis. Stat. § 108.04(13)(e).

Pittman v. Emmpak Foods Inc., UI Hearing No. 04600783MW (3 December 2004). In Pittman, two related employer divisions, Wispak and Emmpak, shared employment records but provided conflicting information that led to an over-payment of benefits. The Commission concluded only one employer existed and the over-payment did not need to be repaid because of employer fault:

Under these rare circumstances, the commission attributes the Wispak fault to Emmpak. As such, while the erroneously paid benefits were not paid due to any fault on behalf the employee, the benefits were not paid “without fault” of Emmpak and the erroneously paid benefits will “stand as paid.” No overpayment will be created.

Id. [Note that 1999 Wisconsin Act 15 amended the wording of Wis. Stat. § 108.22(8)(c) such that employer fault of any kind no longer allowed for waiver of an over-payment. The charging of an over-payment after recoupment to employer accounts because of employer error has not changed, and this penalty remains in force today.] See also Fleming v. Wal Mart Associates Inc, UI Hearing No. 03005241MD (9 March 2004) (allegation that employee misled Department about her discharge not supported by the record, but evidence does show that the employer initially provided inaccurate verbal information when contacted by a claims specialist regarding the reason for the employee’s separation and then failed to timely return, and raise an eligibility issue on, the UCB-16 and UCB-23 reports).

Employer error in responding to departmental requests for information is a common issue. In Weaver v. QTI of Southeastern Wisconsin Inc., UI Hearing No. 10602317MW (2 September 2010), the employer’s drug and alcohol policy could have been mailed or faxed to the department in a timely fashion, and so the employer failed, without good cause, to provide correct and complete information requested by the department during its fact finding investigation, pursuant to Wis. Stat. § 108.04(13). In Givhan v. Christina’s Childcare & Development Center, UI Hearing No. 07603505MW (21 November 2007), benefits used to reduce the forfeiture balance in the amount of $1122 and benefits paid to the employee in the amount of $264 remained charged to the employer’s account because the employer provided inconsistent reasons for the employee’s discharge. In Brunette v. Oneida Tribe Of Indians of Wisconsin, UI Hearing No. 06402964GB (2 May 2007), benefits paid to the employee prior to the end of week 2 of 2007, when the appeal tribunal decision was issued, which amounted to $2655, remained charged to the employer’s reserve account because the employer’s contact number was a general human resources line and not a job line as claimed. In Wickman v. New Berlin Grading Inc., UI Hearing No. 95604172WK (19 January 1996), an employer mistakenly reported sick-pay an employee received as wages. The mistake led to the employee having base period wages to which he was not entitled, and so the over-payment existed because of employer error. In Rathsack v. The Queen Bee, UI Hearing No. 95401613AP (11 April 1996), the employer mistakenly included a back pay award in quarterly reports and so inflated the employee’s benefit year earnings. The resulting over-payment remained charged against the employer’s account.

If anything, the Department’s allegations against the employer constitute nothing more than employer error in responding to a Department request for information. The Department’s aiding and abetting allegation here, however, now adds an additional penalty to all of these cases of employer error. Whenever an employer fails to return a requested report in a timely manner, the employer will face a potential aiding and abetting charge in addition to the already existing penalties for employer error. Accordingly, the Department is essentially adding new penalties to employer errors on top of current penalties. The appeal tribunal should reject this dramatic expansion of unemployment law.

In other words, this case represents a dramatic expansion of employer liability.  If the Department had succeeded in this case, then employers could be liable for additional concealment penalties for nothing more than reporting mistakes whenever claimant concealment has occurred.  Luckily, the employer in this case won this round.  But, who can say the Department will not try again with some other case? If the Department is willing to charge an employer for “concealment” when the facts at best only show that there was a reporting mistake, then employers should be worried about all the concealment changes being debated right now. If employees become strictly liable for their mistakes, employers may suddenly find themselves charged with aiding and abetting those claimant mistakes.

[Updated 21 April 2015 with some edits to improve the writing.]

UI claimants to be strictly liable for their mistakes

Of late, concealment and fraud are grabbing all the attention at the Department of Workforce Development.

Additional penalties
First, Governor Walker has included in his budget additional penalties when claimants are found guilty of concealment. As previously noted, the administrative penalty for concealment is being increased from 15% to 40% and criminal penalties, i.e., jail time and additional fines, are being significantly expanded.

The Department has released a memo to the Advisory Council describing these changes. The increase in the administrative penalty from 15% to 40% is slated to bring in an additional $470,000 for the first fiscal year and nearly $1 million the second fiscal year (these amounts are significantly understated since the Department recovered $1.77 million in 2014 alone with a 15% administrative penalty, see Appendix C at p.16 of the Department’s fraud report). The criminal penalties, furthermore, bring a minimum of nine months in jail (along with additional fines of up to $10,000) or up to ten years in jail and $25,000 in fines for concealment cases that exceed $10,000.

Keep in mind that, unless someone volunteers information sooner (more on this point below), the Department typically does not begin investigating cases concerning alleged wage-reporting discrepancies until six to nine months have passed (the Department attempts to verify wages that a claimant reports on weekly claim certifications with the data available from an employer’s quarterly UI tax filings). So, the amount at issue if the mistake repeats itself each week of a claim can easily cover all 26 weeks of a claimant’s eligibility — easily $5,000 to $8,000 (as noted previously, the Department could sharply limit the amounts at issue by using employer’s monthly or bi-weekly wage withholding reports to the Department of Revenue to do this investigation, leading to a delay of one month rather than the six to nine months now; but the Department has expressed no interest in this kind of efficiency).

Concealment data
Second, the Department has released its annual fraud report for 2014.  As already noted, the tables in the appendices of this fraud report have some interesting numbers. Appendix A on p.14 shows that nearly $20.2 million in allegedly fraudulent over-payments were detected in 2014. Of course, this amount includes “concealment” that occurred prior to 2014 as well as in 2014, so this $20.2 million represents the amount of unemployment benefits that the Department in 2014 identified as “fraudulently” received.

Appendix C on p.16 shows the Department’s efforts at recovering fraudulent and non-fraudulent over-payments. For 2014, the Department managed to recover $21.77 million in “fraudulent” over-payments. This amount includes over-payments that became due in 2014 as well as alleged fraudulent over-payments from prior years. Still, this recovery effort is impressive. The Department is managing to take in more than it billed out, as its 2014 recovery rate is 108% ($21.77 million recovered over $20.2 million charged). In 2013, the Department’s recovery rate was “only” 98.5% ($23.99 million recovered over $24.36 million charged). If nothing else, the Department’s efforts at recovering concealment monies are fantastically successful.

All of these numbers, however, do not indicate just what concealment and fraud are for unemployment purposes. Concealment and fraud cases are supposed to encompass allegations of someone intentionally misleading or defrauding the Department by withholding or hiding information or making a false statement or misrepresentation. See Wis. Stat. § 108.04(11)(g). If someone makes a mistake for some reason, the Department is supposed to correct the unemployment benefits at issue and make an adjustment in the benefit due a claimant in subsequent weeks in light of that mistake, not eliminate all eligibility for unemployment benefits. A charge of concealment, on the other hand, means that something much more than a mere mistake has taken place. As a result, the claimant loses all of his or her unemployment benefits for each week at issue, is assessed (currently) a 15% administrative penalty for the total amount of fraud, and is ineligible for two, four, or eights times the claimant’s weekly benefit rate for each act of concealment (i.e., each week of fraudulently obtained benefits). So, someone who “fraudulently” obtained all $300 of unemployment benefits for ten weeks (because he or she intentionally did not report $40 in earnings each week for ten weeks), has to repay all $3,000 in unemployment benefits received during those ten weeks, must pay a $450 administrative penalty, and cannot collect $6,000 in future unemployment benefits if this “concealment” is his or her first offense ($300 X 2 X 10 weeks).

Obviously, these penalties are severe, since concealment is supposed to be something akin to theft. And so, the standard for finding concealment is similar to a finding of someone stealing. As the Labor and Industry Review Commission repeatedly explains in its concealment decisions:

concealment will not be found where a claimant makes an honest mistake or misinterprets information received from the department. Concealment requires an intent or design to receive benefits to which the claimant knows he or she is not entitled.

The Department is obviously not following this standard, however. Appendix A at p.14 from the fraud report mentioned above lists the mechanisms for how these fraud cases were uncovered by the Department. The last category of cases includes those cases where the claimants themselves volunteered their mistakes. In 2013, there were 275 cases where claimants volunteered their mistakes qua concealment to the Department.  These 275 cases, the Department concluded, constituted concealment, and the Department now seeks to recover $498,307 just in unemployment benefits from those claimants. In 2014, there were 218 cases that concerned $363,713 in “fraudulent” unemployment benefits in which claimants voluntarily disclosed their “fraudulent” mistakes, according to the Department.

Here is the problem: a fraud/concealment charge “requires an intent or design to receive benefits to which the claimant knows he or she is not entitled.” But, 218 fraud cases in 2014 exist because claimants voluntarily disclosed their alleged fraud (see the discussion of concealment in this post about additional problems with the Department’s concealment claims). It simply is not logical to be finding that claimants have a fraudulent intent where those same claimants are disclosing the mistakes in their claim filing in the first place (unless the disclosure itself was part of some scheme to hide their intent). Perlongo v. Joey’s Seafood & Grill, UI Hearing Nos. 13610060MW & 13610061MW (22 July 2014) illustrates this issue. In Perlongo, the employee worked part-time for three different employers. When filing her claims on-line, however, she hit the send button on her claim before she could add the wage and hours received from some of these employers. She then made repeated phone calls and eventually got through to the Department to provide the correct information. This claim-filing problem and subsequent phone calls to correct the problem happened for five weeks of unemployment benefits.

Even though she self-reported her mistakes, the Department charged the claimant with fraud and concealment of $93, a 15% administrative penalty of $13.95, and a loss of $930 in future unemployment benefits. She appealed, and an administrative law judge affirmed the findings of concealment because the claimant had previously experienced problems filing her claims.

The Commission, however, overturned the concealment charges. There simply was no evidence in the record that the claimant’s mistakes at issue in this case were intentional.

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 claimant in Perlongo managed to overturn her concealment charge because she appealed her case to the Commission. But, there were 218 other claimants in 2014 that did not appeal their cases to the Commission even though they, like Perlongo, self-reported their mistakes to the Department. That is, the Department is charging claimants with concealment for nothing more than simple mistakes. There is no actual intent to deceive in cases where claimants like Perlongo voluntarily disclose their mistakes. Moreover, because the Department thinks claimants like Perlongo are committing concealment anyway, it is very likely that many more if not most of the 12,744 cases in 2014 currently considered to be fraudulent by the Department are nothing more than mere mistakes in filing a claim.

The Department is not acknowledging this problem in its concealment claims. At the 19 March 2015 Advisory Council meeting, the Department was adamant in explaining to council members that only where claimants are intentionally acting to deceive the Department are the cases considered to involve fraud. Claimants’ inability or mistakes, the Department assured council members, are not considered concealment. The Department’s actions belie these assurances, however.

Amending concealment law
Which leads to the third point in this discussion of concealment.  After the Department finished its presentation about its fraud report to the Advisory Council, the Department then introduced its latest proposal, D15-08, which changes the definition of concealment. Wis. Stat. § 108.04(11)(g) is to be amended to read:

For purposes of this subsection, “conceal” means to intentionally mislead or defraud the department by withholding or hiding information or making a false statement or misrepresentation. “Conceal” does not require an intent or design to receive benefits to which the claimant knows he or she is not entitled.

And a new Wis. Stat. § 108.04(11)(h) is to be created:

As a condition of eligibility for benefits under this chapter, a claimant has a duty of care to provide an accurate and complete response to each department inquiry. In response to the department’s questions in the benefit claims process, a claimant’s false statement or representation creates a rebuttable presumption that the claimant misled the department. A claimant may rebut the presumption by competent evidence that the claimant did not mislead the department. Competent evidence does not include evidence that a claimant provided false or misleading answers due to any of the following:

1. A claimant’s failure to read or follow instructions or other communications by the department related to a claim.

2. A claimant’s reliance on the statements or representations of persons other than a department employee authorized to provide unemployment insurance advice to claimants regarding the current claim.

3. A claimant’s limitation or disability, where the claimant has not brought such limitation or disability to the attention of a department employee authorized to provide service to claimants before issuance of the initial determination and has not provided competent evidence of the disability or limitation.

This change is breathtaking.  Not only does this new definition of concealment place the burden of proof on claimants to demonstrate that their mistakes are not actual mistakes and not their fault, but the new definition then goes on to limit how they might actually demonstrate their innocence by preventing them from claiming: (1) confusion or lack of understanding of departmental materials, (2) reliance on advice from others unless they can demonstrate that the advice was from someone “authorized to provide unemployment insurance advice to claimants regarding the current claim,” or (3) a learning disability of some kind unless the learning-disabled claimant has the foresight to notify the Department beforehand of his or her learning disability.  As the title to this post indicates, this proposal makes claimants strictly liable for any claim-filing mistake they might make.

When this new definition is added to the expanded criminal penalties also being proposed, it seems very likely that claimants will be facing jail time and criminal fines now for nothing more than their unintentional mistakes.  As commentators have recently observed here and here, debtor prisons are making a comeback through our criminal justice system.  Apparently, Wisconsin wants to join this bandwagon through unemployment law.  Wisconsinites will now face jail time and constant debt for nothing more than being confused about on-line filing, unsure of how to handle self-employment, or for making typos that they fail to uncover.

Finally, it has to be noted that the Department’s rationale for this change is flat-out wrong.  In D15-08, the Department claims that this change in the law is needed because the Commission has of late misapplied the definition of concealment. The history of how concealment has been defined and understood in unemployment law is detailed in Martin Lash, UI Hearing No. 13403268AP (30 May 2014) (claimant charged with $2,146 in concealment and a 15% penalty of $321.90 only has to return a $110 over-payment because of his unintentional mistakes).

First, Wis. Stat. § 108.04(11) does require that there be an intent to defraud. This is unmistakably true after the effective date of 2007 Wisconsin Act 59. The law unambiguously states that “conceal” means to intentionally mislead or defraud the department. The purpose of providing misleading or fraudulent information is to receive benefits to which the claimant would otherwise not be entitled.

Second, long before the legislature added the definition of “conceal” to Wis. Stat. § 108.04(11), the commission, dating back to at least 1959, has held that concealment involves an “intentional plan to withhold information for a fraudulent purpose.” [citing Holloway v. Mahler Enterprises Inc., UI Hearing No. 11606291MW (4 November 2011)] This fraudulent purpose is “to receive benefits to which the individual knows he or she is not entitled.” To help achieve unemployment insurance legal conformity, decisions of higher unemployment insurance appeal tribunals and state courts “are considered binding upon lower tribunals” in deciding questions involving the interpretation of law.

A statement of fact that is simply mistaken is not fraudulent. To be fraudulent, a false statement must be made with intent to deceive. A claimant who believes he or she has submitted a legitimate claim for unemployment benefits lacks the fraudulent intent essential to support a finding of concealment.

In this case, the employee received advice from the department which may or may not have been correct at the time it was given. The employee relied on that advice and filed his claims accordingly. As a result, he did not provide accurate information to the department on his weekly claim certifications beginning in 2009, and he received benefits to which he was not entitled. However, the employee did not have the fraudulent intent essential to support a finding of concealment. Therefore, while the employee is required to repay the benefits he received in error, additional penalties will not be imposed.

Under the Department’s new definition of concealment. the claimant in Lash would be precluded from relying on the prior advice he received from the Department since that advice was not related to his current unemployment issues.  And, he could not claim he was confused or did not understand his unemployment reporting obligations.  Under the new definition of concealment, he is guilty of fraud.  Case closed.

The Department of Justice recently concluded that the criminal justice system in Ferguson, MO was designed to extract revenue from its citizens.  It appears that the Department is taking the same tack with claimants and their unemployment benefits.

AARP Public Policy Institute report on unemployment and care-giving

From Rick McHugh, Staff Attorney at the National Employment Law Project:

A newly-released report show that individuals who lose jobs due to circumstances related to care-giving responsibilities for a spouse or family member are not likely to receive unemployment insurance benefits. Access to Unemployment Insurance Benefits for Family Caregivers, written jointly by the AARP Public Policy Institute, National Employment Law Project, and Center for Law and Social Policy is a comprehensive 51-state overview of how unemployment insurance rules apply to those who are forced to quit their jobs or who are fired when they undertake care-giving responsibilities for spouses, older relatives, or other family members requiring care-giving assistance.

Based upon a review of legal rules and interviews with agency staff and local advocates, the report finds that a combination of outmoded rules and lack of supportive resources leaves many potential recipients in the dark about their unemployment insurance options. In addition, incomplete implementation results in many denials of claims even in states that have adopted more favorable rules excusing quits for compelling family circumstances.

The report on family care-giving and unemployment insurance was commissioned by the AARP Public Policy Institute as part of its Raising Expectations Long-Term Services and Supports Scorecard project and was supported by funding from The SCAN Foundation and The Commonwealth Fund. The co-authors of the report are Kathleen Ujvari of the AARP Public Policy Institute, Liz Ben-Ishai of CLASP, and Rick McHugh of NELP.