DWD explains its concealment changes

At the request of an Advisory Council member, the Department released a memorandum explaining the third sub-section of its proposed new concealment law. This concealment proposal was previously described in this post, and a general review of concealment can be found in these posts. Here is the Department’s latest memo with commentary.

To: Unemployment Insurance Advisory Council
From: Andy Rubsam
CC: Janell Knutson
Date: January 14, 2016
Re: D15-08 Definition of Concealment — effect of proposed section 108.04(11)(g)3

The Department proposed, and the Council agreed, to amend the statutory definition of “conceal” in the unemployment insurance law. The revised definition of “conceal” contains the following provision: “Nothing in this subsection requires the department, when making a finding of concealment, to determine or prove that a claimant had an intent or design to receive benefits to which the claimant knows he or she was not entitled.” The Council requested that the Department provide analysis of this provision, including examples of how the law will be applied.

NOTE: This language is the third sub-section of the new concealment definition. The first sub-section defines concealment as “intentionally misleading the department by withholding or hiding information or making a false statement or misrepresentation.” The second sub-section states that 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” and then goes on to list the factors to be considered by the Department in determining whether the claimant has fulfilled this duty of care. Accordingly, the statute places the burden of proof on claimants to demonstrate how their actions are innocent of any alleged concealment. The memo does not address this shift in the burden of the proof in concealment cases. Cf. Leonard A. Miszewski, UI Hearing No. 12401605AP (30 November 2012) (“A concealment finding, however, must be supported by clear and convincing evidence,” not just by a preponderance of the evidence [footnote omitted]).

The Department interprets the proposed section 108.04(11)(g)3 in concealment cases to mean that the Department must find that the claimant intended to deceive the Department but the Department need not determine whether the claimant knew that the claimant would in fact receive a greater amount of unemployment benefits as a result of the deception. The proposed statutory change requires the Department to determine whether the claimant intended to mislead the Department on the benefit claim “by withholding or hiding information or making a false statement or misrepresentation,” but does not require the Department to determine that the claimant knew the effect of that intentionally incorrect answer.

NOTE: So, the Department is explaining here that concealment is an intentional act but establishing that intent exists when there is “withholding or hiding of information or making a false statement or misrepresentation” (aka a mistake of some kind) and does NOT require the Department to show that the claimant knew he or she was intending to conceal. In other words, concealment will be an intentional act when there is a mistake and does not require the claimant to have any knowledge about the intended consequences of that mistake. Huh? How is concealment still an intentional act then?

Keep in mind how concealment is currently defined for unemployment purposes. After reviewing decades of case law and statutory developments in unemployment law, the Commission explained in Holloway v. Mahler Enterprises, Inc., UI Hearing No. 11606291MW (4 November 2011) that:

From this background, what it means to intentionally mislead or defraud may be stated simply: it means the claimant is trying to get away with something the claimant knows he or she should not be getting away with. In most unemployment insurance cases where the issue is concealment, what the claimant will be alleged to have tried to get away with, is gaining unemployment benefits to which the claimant knows he or she is not entitled. By contrast, where a claimant’s incorrect answer to a material question is due to ignorance or mistake, it will not be the case that the claimant is trying to get away with something, and that claimant will not be guilty of concealment.

What the Department is doing with this new definition of concealment, it seems, is removing the need to show in a concealment case that a claimant is trying to get away with something he or she knows she should not. But, how will concealment be shown then if knowledge about the concealment no longer has to demonstrated in some way? Will any mistake now be concealment? Does the Department provide examples that could clarify these changes?

For example, if a claimant intentionally fails to report quitting a job, the claimant has concealed. This is true even if the quit would not have disqualified the claimant for benefits because the quit fell within one of the exceptions such as quit with good cause. Proposed section 108.04(11)(g)3 provides that the Department does not need to establish that the claimant knew that the failure to report the quit would result in payment of benefits to which the claimant was not entitled. Rather, the claimant intentionally misled the department by not providing the information.

NOTE: This example does not really explain anything, since the intent of the concealment is presumed. What are the circumstances for finding that a claimant’s failure to report a quit is intentional? Furthermore, this example of quitting for good cause as concealment regardless of the consequences is unnecessary. Right now, a claimant can still commit concealment for actions that would not effect their eligibility for unemployment benefits. See Kincaid v. Madison Taxi, Inc., UI Hearing No. 15001437MD (20 August 2015) (claimant who failed to report job offer for which he had good cause for declining still committed concealment because all bona fide job offers have to be reported on weekly claim certifications).

So, the Department is showcasing an alleged change in unemployment concealment that does not actually exist. Per Kincaid, concealment right now can be found regardless of whether the claimant is entitled to the unemployment benefits or not. The issue in current law is what the claimant intended to accomplish via the filing mistake. Accordingly, this example provides no clarity about what this new concealment definition is doing.

This “example,” however, does provide some “clarity” in light of the Department’s new on-line claims filing system. When the Department implements its new on-line claim-filing system, claimants will be asked literally about dozens of kinds of information they must correctly provide. Besides hours and wages, this new system will require them to classify accurately their weekly income from holiday pay, sick pay, baby-sitting pay, performance bonuses, and other kinds of sources and report those weekly totals without any mistake.

Traditionally, claimants have not been liable for concealment when the total income reported in a week is correct even though the categories of where that income originates might be incomplete or mistaken. The Department’s example, however, indicates that any mistake regardless of the consequences on the benefits due a claimant will now count as concealment. In other words, if I report $150 in wages on a weekly claim but do not indicate that this amount is actually $100 in earned wages and $50 in holiday pay, under this new definition I am guilty of concealment simply because I was inaccurate in how I classified the wages I received. As the Department explains in its memo, the new concealment definition” does not require the Department to determine that the claimant knew the effect of [an] intentionally incorrect answer.” Accordingly, the “materiality” of the mistake is apparently no longer needed for an allegation of concealment. The mistake IS itself concealment.

Another example could involve a claimant intentionally failing to report part-time work on their benefit claim. Because the claimant intentionally failed to report work, the claimant concealed. Proposed section 108.04(11)(g)3 provides that the Department is not required to determine the claimant’s knowledge about the effect of the false answer on the claimant’s benefit amount. Had they not concealed the information, the claimant may have been entitled to partial benefits.

NOTE: This example again presumes intentional concealment has taken place without any explanation of how concealment or the intent for that concealment is actually found. And, the direct statement that “the Department is not required to determine the claimant’s knowledge about the effect of the false answer” indicates that the intent needed for establishing concealment will be some sort of knowledge-free intent. In other words, concealment can be charged without any evidence regarding the claimant’s knowledge of what his or her concealing act means. Accordingly, it seems that good faith mistakes can know be charged as concealment since a claimant’s knowledge of his or her actions no longer matter. In this light, this new concealment law overturns prior Commission decisions like Peters v. United Rentals, UI Hearing No. 12400788AP (31 May 2013) (employee made a good faith mistake in reporting her quit as a discharge in light of mediation agreement regarding her separation from employment). As stated before, unemployment claims are now a trap and should be avoided.