Retroactive SSDI

The Department of Workforce Development continues to pursue its cause celebré of keeping recipients of Social Security Disability Income (“SSDI”) from receiving unemployment benefits based on their work. As noted previously, the number of claimants affected by this issue keeps increasing (originally 50 and now numbering around 3,500 claimants), a recent court case agreed with the Department about the prohibition on receiving all unemployment benefits allegedly set forth in current unemployment law, and new legislation accomplishing this complete ban on unemployment benefits that will be retroactive to 5 January 2014 has been adopted by the Advisory Council and the Department.

At the 18 June 2015 Advisory Council meeting, a draft of Department-sponsored legislation (see pp. 7-9) was distributed. In this draft legislation, Wis. Stat. § 108.04(12)(f)1 is re-numbered (f)3 and amended to read:

(f)3. a. Any Except as provided in Subd. 3. b. to d., an individual who actually receives social security disability insurance benefits under 42 USC ch. 7 subch. II in a given week is ineligible for benefits paid or payable in that same week under this chapter for each week in the entire month in which a social security disability insurance payment is issued to the individual.

Wis. Stat. § 108.04(12)(f)1m is created and reads:

The intent of the legislature in enacting this paragraph is to prevent the payment of duplicative government benefits for the replacement of lost earnings or income, regardless of an individual’s ability to work.

Wis. Stat. § 108.04(12)(f)2 is re-numbered (f)4 and amended to read:

Information that the department receives or acquires from the federal social security administration that an individual is receiving regarding the issuance of social security disability insurance benefits under 42 USC ch. 7 subch. II in a given week payments is considered conclusive, absent clear and convincing evidence that the information was erroneous.

Wis. Stat. § 108.04(12)(f)2m is created and reads:

In this paragraph,”social security disability insurance payment” means a payment of social security disability insurance benefits under 42 USC ch. 7 subch. II.

Wis. Stat. § 108.04(12)(f)3, with sub-sections b, c, and d, are created and read:

b. In the first month a social security disability insurance payment is first issued to an individual, the individual is ineligible for benefits under this chapter for each week beginning with the week the social security disability insurance payment is issued to the individual and all subsequent weeks in that month.

c. Following a cessation of social security disability insurance payments to an individual and upon the individual again being issued a social security disability insurance payment, the individual is ineligible for benefits under this chapter for each week beginning with the week the social security disability insurance payment is issued to the individual and all subsequent weeks in that month.

d. Following cessation of social security disability insurance payments, an individual may be eligible for benefits under this chapter, if otherwise qualified, beginning with the week following the last Saturday of the month in which the individual is issued his or her final social security disability insurance payment.

As evident in this draft language, the general prohibition current set forth in unemployment law and based on “receiving” SSDI benefits (see Kluczynski) is replaced with specific language that applies SSDI monthly benefits across all weeks of unemployment eligibility. While not the most artful , this proposed language most likely will accomplish its goal of making SSDI recipients ineligible for any unemployment benefits for as long as they are receiving monthly SSDI checks.

NOTE: Obviously, this proposal still does nothing to address the problem on the employer end that will make them immune to any unemployment-related consequences — i.e., changes to their experience ratings — when laying off SSDI recipients. Moreover, this change is still making an artificial distinction between SSDI benefits and regular social security benefits. For instance, SSDI recipients have their SSDI benefits become regular social security benefits upon reaching retirement age and no longer receive “SSDI” benefits.

Finally, this draft language contains the startlingly retroactive application to 5 January 2014 of this prohibition (see pp.14 and 13):

(1) CONCURRENT RECEIPT OF SSDI AND UI BENEFITS. The treatment of section 108.04(2)(h) and (12)(f)1., 1m., 2., 2m., and 3. b. to d. of the statutes and SECTION 27(2) of this act take effect retroactively to January 5, 2014.

[SECTION 27] (2) CONCURRENT RECEIPT OF SSDI AND UI BENEFITS. The treatment of section 108.04(2)(h) and (12)(f)1., 1m., 2., 2m., and 3. b. to d. of the statutes first applies retroactively to determinations issued under section 108.09 of the statutes on the effective date of this subsection.

Concealment redefinition approved: Watch out claimants

There have been previous discussions here in this blog about the Department of Workforce Development’s concealment efforts on 27 January 2014, 28 May 2014, 14 April 2015, 15 April 2015, 26 May 2015, 23 April 2015, and numerous other posts.

On 19 May 2015, the Advisory Council approved of a redefinition of concealment that did not make logical sense — reinserting the word “intentionally” in various places of the new redefinition but stating that concealment does not require “an intent or design to receive benefits,” and shifting the burden of proof on claimants to disprove their concealment. In this redefinition of concealment, concealment was both intentional and not intentional.

At the 18 June 2015 council meeting, new concealment language was made available in Department-sponsored legislation (see pp.6-7). In this draft legislation, Wis. Stat. § 108.04(11)(g) is re-numbered (g)(1) and amended to read:

For purposes of 1. In this subsection, “conceal” means to intentionally mislead or defraud the department by withholding or hiding information or making a false statement or misrepresentation.

And, Wis. Stat. §§ 108.04(11)(g)(2) and (3) are created to read:

2. 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 inquiry made by the department in connection with his or her receipt of benefits. If a claimant, in response to such an inquiry, makes a false statement or representation regarding a material fact relating to his her eligibility for benefits or regarding his or her wages earned or paid or payable or hours worked in a given week, there is rebuttable presumption that the claimant has violated par.(a) or (b), whichever is applicable. A claimant may rebut that presumption with competent evidence that the claimant did not intentionally mislead the department, but competent evidence does not include evidence that a claimant provided false or misleading answers due to any of the following:

a. The claimant’s failure to read or follow instructions or other communications of the department related to a claim for benefits.

b. The claimant’s reliance on the statements or representations of persons other than an employee of the department who is authorized to provide advice regarding the claimant’s claim for benefits.

c. The 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.

3. It is not a prerequisite to a finding that a claimant concealed a material fact relating to his or her eligibility for benefits as provided in par.(a) or concealed wages or hours as provided in par.(b) that the claimant has an intent or design to receive benefits to which the claimant knows he or she was not entitled.

This draft legislation is as illogical as the initially approved proposal. Concealment is still intentional, but under sub-section (3) a finding of concealment does not require any actual intent to conceal. Furthermore, the burden of proof will still be on claimants to disprove their concealment. And, folks cannot claim in their defense: (a) confusion or lack of understanding of departmental materials, (b) reliance on advice from others unless they can demonstrate that the advice was from someone in the Department “authorized to provide advice regarding the claimant’s claim,” or (c) 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 and provide “competent evidence” establishing that disability (so, simply claiming a disability will not suffice). In other words (and as noted previously), claimants will be strictly liable for this mistakes.

A May letter to the Advisory Council illustrates these issues:

May 25, 2015

Janell Knutson, Chair Unemployment Insurance Advisory Council 201 E. Washington Avenue PD. Box 8942 Madison, Wisconsin 53708

Dear Ms. Knutson,

I have recently read the proposed law changes to Statute 108.04(11)(g) regarding the definition of “conceal” which will eliminate the word “intentionally” mislead or defraud. As a claimant who has had to pay overpayments that were not done intentionally, this concerns me.

Recently, I incurred an over-payment because my reported wages were “under reported.” I work highway construction. My pay scale is all over the place due to varied projects. For example, I worked on a county road project. As a conscientious person, I called the payroll division to clarify the wages and reported accordingly. What the payroll division didn’t tell me is that we were also paid benefitt pay. County jobs typically don’t include benefits; state highway projects do. Though this was a county road, the job was state funded. As soon as I received my pay check I called and gave correct information. If the “intent” element is removed, a claimant in my position may not realize he or she has received benefits to which he or she is not entitled, thus might be accused of concealment. Because these errors may not be discovered for a length of time, this could lead to hefty consequences for an honest mistake.

I have another personal scenario involving a friend. She had just signed up for benefits and wanted my help to access the dwd online web services. When she got onto her account, I noticed that she had reported wages of only $10. She works ten hours a week as a crossing guard and had actually earned $100. She reported these wages because she misunderstood the question. She thought that she was to report what she earned per hour and then how many hours she had worked. To my knowledge, she has never filed before. This also was an honest, understandable mistake. She also called and corrected this immediately. Had she not, it’s possible that this could have gone undetected for some time. Repayment of the monies, imposing the new penalty of 40%, and not allowing benefits until 2x her overpayment would be an excessive penalty for a misunderstanding.

I realize that fraud and concealment are major issues, but I am concerned that the passing of this proposal may deny a person their right to due process. I hope you will take my insights into consideration. Thank you for your time.

NOTE: At the June 18th council meeting, Ms. Knutson advised council members that there had been e-mail correspondence with the individual who authored the letter and that no discussion or response from the council to the letter was needed. Ms. Knutson did NOT say what her response to the letter was.

Both “mistakes” here were caught early through foresight and extreme carefulness. But, if not caught early, both situations would easily qualify as concealment, and there would be little the claimants could do to counter that accusation. A claimant who never corrected the “benefit pay” she received would be guilty of a concealment mistake even though she did NOT know at the time she filed her weekly claim that she would be receiving such wages. If she did not correct the mistake on her own, concealment would be charged because the burden is now on the claimant to prove his or her mistake was not actually a mistake she had any control over. Since she eventually knew about the benefit pay via a pay stub, the Department would likely allege that she was responsible for correcting the mistake even though she did not know about the mistake at all when she first filed her weekly claim certification.

The claimant who mis-understood her weekly claim reporting obligations by reporting her hourly wage rather than the total weekly wages she received is completely out of luck. Her mis-understanding will, by law, be excluded as any kind of explanation for her mistake. In short, the only chance a claimant will have to win such a concealment case will be to dispute the mistake ever occurred. Claiming that the mistake took place for reasons for which the claimant had no knowledge or awareness is not possible here since the claimant cannot allege that she does not know how many hours she worked or the total earnings she received for that work.

SSDI and unemployment: recent developments

A previous post in April 2015 described how the Department of Workforce Development is attempting to get around the Labor and Industry Review Commission’s decision in Kluczynski.

Since that post, there has been a series of new developments.

The number of SSDI claimants keeps increasing

When the Department first proposed eliminating eligibility for unemployment benefits for all those receiving SSDI benefits, the Department indicated that the prohibition was likely to affect no more than fifty claimants.

In February 2015, the Department informed the Advisory Council that the SSDI ban affected 687 claimants in January 2014 when enforcement began.

In May 2015, this number has increased even further. The Advisory Council’s 2015 report at p.8 has the following update on the SSDI prohibition:

SSDI and UI Payments

2013 Wisconsin Act 36 provides a claimant cannot simultaneously collect both Social Security Disability Insurance (SSDI) benefits and UI benefits.

Primary Statute Created: Wis. Stat. §§108.04 (2) (h) and 108.04 (12)(f).

The ban on simultaneously collecting both Social Security Disability Insurance (SSDI) benefits and UI benefits saved hundreds of thousands of dollars for the UI Trust Fund as close to 3,500 UI claims have been denied through early May 2015.

DWD wants to back-date its new SSDI legislation to 4 January 2014

As previously noted, in April 2015 the Advisory Council approved a new prohibition on SSDI benefits intended to fix the poor drafting of the original SSDI prohibition.

At the May 19th council meeting, the Department announced that this new SSDI prohibition would be back-dated to 4 January 2014, the date of the original SSDI prohibition. This back-dating is already included in the DWD-sponsored bill being drafted.

A recent court case found in favor of the Department

A few cases continue to be appealed concerning claimants receiving SSDI benefits who still want their unemployment benefits because of their prior work. Here is an excerpt from a recent letter I sent the Commission in one of those cases. In this letter, I describe a circuit court decision that found Kluczynski unpersuasive.

This appeal to the Commission concerns the Commission’s understanding of Wis. Stat. § 108.04(12)(f)(1), enacted pursuant to 2013 Wis. Act 36, and as detailed in Kluczynski, UI Hearing No. 14400214AP (30 May 2014).

In Kluczynski, the Commission held that this statute unambiguously restricted receipt of unemployment benefits to the “given week” a claimant “actually receives” his or her SSDI benefits. In other weeks where unemployment benefits can be received and for which no disability benefits are actually received, claimants are still eligible for their unemployment benefits.

As the Commission and the Department are aware, Judge Neiss recently held in DWD v. LIRC, Dane County Circuit Court Case No. 2014-CV-3249 (27 May 2015) that the statutory text at issue here was ambiguous because two state agencies — the Commission and the Department — offered opposing interpretations of the statute. The court then goes on to observe that an intransitive definition of “receives” means the act of receiving, and so a person who “actually receives [SSDI benefits] in a given week” is, pursuant to Wis. Stat. § 108.04(12)(f)(1), someone who is identified as an SSDI recipient for each week of their unemployment eligibility. As a result, Judge Neiss concluded, this prohibition on receiving unemployment benefits applied constructively to all the weeks in a month despite the modifiers “actually . . . in a given week” in the statute about “receiving” SSDI benefits. In reaching this conclusion, Judge Neiss has seemingly stretched statutory text to create an ambiguity and reach an intended outcome rather than first reading the text itself as part of the state’s unemployment law as a whole.

NOTE: As noted in Kluczynski, constructive receipt of one-time payment across several weeks in order to determine eligibility for unemployment benefits is provided for in Wis. Stat. § 108.05(7)(d) regarding pension payments. So, there is no need to find ambiguity in one provision of unemployment law to reach a result for which another provision of unemployment already offers unambiguous language regarding the constructive receipt of payments. As proffered by the Commission in Kluczynski, this language could have accomplished the intended result simply by replacing “shall allocate and attribute” with “shall deem and attribute” in this constructive receipt language.

The Commission should not adopt this outcome in this appeal but instead affirm its analysis in Kluczynski. The Commission’s explanation of its analysis in Kluczynski did NOT imply that this statutory text was actually ambiguous, as Judge Neiss holds. Rather, the Commission explained in its memorandum opinion in Kluczynski why the Department’s arguments for its proffered interpretation of unambiguous text are mistaken and why its arguments about the statute being ambiguous were insufficient. Because the statutory text as written does not accomplish its intended result, it should not be rewritten by the Commission or the courts to do so.