Opinion
No. 31 C.D. 2012
07-24-2012
James Laczo, Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE ANNE E. COVEY, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE McGINLEY
James Laczo (Claimant) challenges the order of the Unemployment Compensation Board of Review (Board) which affirmed the referee's determination that Claimant was ineligible for benefits under Section 402(h) of the Unemployment Compensation Law (Law) and determined that Claimant received a fault overpayment of regular unemployment compensation benefits in the amount of $10,764 under Section 804(a) of the Law, 43 P.S. §874(a), and a fraud overpayment of federal additional compensation benefits in the amount of $650 under Section 4005(a), (b), and (c) of the Emergency Unemployment Compensation Act of 2008 (EUC Act), 26 U.S.C. §3304 note in accordance with Section 2002(f) of the American Recovery and Reinvestment Act of 2009.
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §802(h).
Section 2002(f) of Division B, Title II (Assistance for Unemployed Workers and Struggling Families Act) of the American Recovery and Reinvestment Act of 2009, P.L. No. 111-5, 123 Stat. 115 (2009) (ARRA) provides for an additional $25 per week in compensation to individuals otherwise entitled to compensation under state law. ARRA also provides that overpayments under ARRA shall be recovered in the same manner as Emergency Unemployment Compensation benefits.
In a separate decision (No. 11-09-B-4836), the referee determined that Claimant received a fraud overpayment of EUC benefits in the amount of $14,076 under Sections 4005(a), (b), and (c) of the EUC Act of 2008 for claim weeks ending July 24, 2010, through March 12, 2011, and $525 in accordance with Section 2002(f) of ARRA. It is disputed whether Claimant appealed this determination to the Board.
The facts, as initially found by the referee and confirmed by the Board, are as follows:
1. For the purposes of this appeal, the claimant was employed by Kistler Building Supply as a driver full time from approximately September 20, 2008 through January 1, 2010. He returned to work from January 18, 2010 through January 22, 2010.
2. In conjunction with the claimant's full-time employment at Kistler Building Supply, the claimant entered into an independent contractor agreement with a company doing business as A&A Limousine Service as a limo driver on a per-job basis.
3. The claimant continued his independent limo driver service from the end of the calendar year 2008 to present.
4. In calendar year 2008, the claimant had wage income of $26,590.
5. During calendar year 2009, the claimant's Schedule C for his service as a limo driver reflected net income of $4,995.
6. After the claimant's lay off from Kistler Building Supply in early 2010, the claimant was able to accept
more limo work on the weekends than the previous calendar year.Referee's Decision, August 19, 2011, (Decision), Findings of Fact Nos. 1-11 at 1-2.
7. The claimant's work with Kistler Building Supply as a commercial driver limited the hours he was able to provide availability to accept the limo work that was usually offered during the weekends.
8. In calendar year 2010, the claimant's Schedule C reflected net income of $21,773.
9. At the time of the claimant's application for benefits via internet in early January 2010, and during each biweekly claim week he signed for, the claimant never identified working as an independently contracted limo driver or preparing tax returns (which was not adjudicated by the Service Center).
10. The claimant received $10,764 in UC benefits for claim weeks ending January 16, 2010 through July 17, 2010.
11. The claimant received federal additional compensation benefits in the amount of $650, paid at $25 per week, for claim weeks ending January 16, through July 17, 2010.
The referee determined that Claimant was ineligible for benefits because he engaged in self-employment as an independent limousine driver and this endeavor did not qualify as a sideline business activity. With respect to the overpayments, the referee determined:
Although the record is devoid of the internet application the claimant would have filed when he initially filed his application for benefits dated January 2010, it is apparent that the claimant failed to disclose his endeavor as a self-
employed limo driver at the time he filed said application. In fact, the claimant consistently filed biweekly claims for benefits apprising the Department that he was not working which was not the case for the majority of the claim weeks even giving the claimant the benefit of the doubt that he was uncertain how to report his earnings from his self-employment driving limousines. One receiving remuneration for services rendered is work and the claimant had more than one opportunity to disclose that work to provide the Service Center an opportunity to disclose that work to provide the Service Center an opportunity to adjudicate those services rendered. Instead, the claimant remained silent until the Internal Audits Division received a tip that the claimant was receiving UC benefits while operating a limousine. The claimant's material omission of his substantial services as a limo driver constitutes fault on the claimant's part to establish a fault overpayment in this instance. Therefore, a fault overpayment is properly established.Decision at 3-4.
. . . .
As stated above, the claimant consistently notified the UC Service Center when filing biweekly that he had not worked, despite a majority of weeks having substantial work as a limo driver. Therefore, a fraud overpayment of federal additional compensation benefits is established.
The Board affirmed.
Claimant contends that the Board's determination that Claimant was responsible for fraud or fault overpayment of benefits is unsupported by substantial evidence because there was no evidence of Claimant's state of mind to indicate that he knowingly or deliberately failed to disclose material facts concerning his income and that his timely request for review by the Board should be considered to have encompassed both decisions of the referee because his appeal letter referred to and included reference to both appeal numbers.
This Court's review in an unemployment compensation case is limited to a determination of whether constitutional rights were violated, errors of law were committed, or findings of fact were not supported by substantial evidence. Lee Hospital v. Unemployment Compensation Board of Review, 637 A.2d 695 (Pa. Cmwlth. 1994).
Initially, Claimant contests the referee's determination that he was liable for a fault overpayment under Section 804(a) of the Law, 43 P.S. §874(a), and a fraud overpayment under ARRA. Claimant concedes that the Board did not find him credible when he testified that he did not believe that his work as an independent limousine driver disqualified him from the receipt of unemployment compensation benefits. Claimant argues that the Board did not make requisite findings concerning his state of mind with respect to the fault overpayment.
Section 804(a) of the Law, 43 P.S. §874(a), provides, in relevant part:
Any person who by reason of his fault has received any sum as compensation under this act to which he was not entitled, shall be liable to repay to the Unemployment Compensation Fund to the credit of the Compensation Account a sum equal to the amount so received by him and interest at the rate determined by the Secretary of Revenue as provided by section 806 of the act of April 9, 1929 (P.L. 343, No. 176), known as "The Fiscal Code," per month or fraction of a month from fifteen (15) days after the Notice of Overpayment was issued until paid.
Sections 4005(a), 4005(b), and 4005(c) of the EUC Act of 2008, 26 U.S.C. §3304 note, provide:
(a) In general.- If an individual knowingly has made, or caused to be made by another, a false statement or representation of a material fact, or knowingly has failed, or caused another to fail, to disclose a material fact, and as a result of such false statement or representation or of such nondisclosure such individual has received an amount of emergency unemployment compensation under this title to which such individual was not entitled, such individual-
(1) shall be ineligible for further emergency unemployment compensation under this title in accordance with the provisions of the applicable State unemployment compensation law relating to fraud in connection with a claim for unemployment compensation; and
(2) shall be subject to prosecution under section 1001 of title 18, United State Code.
(b) Repayment.- In the case of individuals who have received amounts of emergency unemployment compensation under this title to which they were not entitled, the State shall require such individuals to repay the amounts of such emergency unemployment compensation to the State agency, except that the State agency may waive such repayment if it determines that-
(1) the payment of such emergency unemployment compensation was without fault on the part of any such individual; and
(2) such repayment would be contrary to equity and good conscience.
(c) Recovery by state agency.-
(1) In general.- The State agency may recover the amount to be repaid, or any part thereof, by deductions from any emergency unemployment compensation payable to such individual under this title or from any unemployment compensation payable to such individual under this title or from any unemployment compensation payable to such individual under any State or Federal unemployment compensation law administered by the State agency or under any other State or Federal law administered by the State agency which provides for the payment of any assistance or allowance with respect to
any week of unemployment, during the 3-year period after the date such individuals received the payment of the emergency unemployment compensation to which they were not entitled, except that no single deduction may exceed 50 percent of the weekly benefit amount from which such deduction is made.
(2) Opportunity for hearing.- No repayment shall be required, and no deduction shall be made, until a determination has been made, notice thereof and an opportunity for a fair hearing has been given to the individual, and the determination has become final.
The word "fault" within the meaning of Section 804(a) of the Law, 43 P.S. §874(a), connotes an act to which blame, censure, impropriety, shortcoming, or culpability attaches. To find "fault" under Section 804(a), there must be a finding concerning the claimant's state of mind. Maiorana v. Unemployment Compensation Board of Review, 453 A.2d 747 (Pa. Cmwlth. 1982). "Conduct that is designed improperly and intentionally to mislead the unemployment compensation authorities is sufficient to establish a fault overpayment. . . . For example, an intentional misstatement on an application for benefits can support a finding of fault. . . . To find fault, the Board must make some findings with regard to a claimant's state of mind." (Citations omitted). Chishko v. Unemployment Compensation Board of Review, 934 A.2d 172, 177 (Pa. Cmwlth. 2007).
In Carter v. Unemployment Compensation Board of Review, 442 A.2d 1245 (Pa. Cmwlth. 1982), the Board determined that Jimmie Lee Carter (Carter) was subject to a fault overpayment of $2,897 because he deliberately withheld information from the Office of Employment Security concerning his ineligibility for benefits where he first refused suitable work and then became disabled and was unavailable for suitable work. Carter, 442 A.2d at 1246-1247.
Carter petitioned for review with this Court which affirmed:
We think the record before the Board clearly establishes the fault of the claimant. A fair reading of the record establishes that the claimant withheld information from the Office of Employment Security that was material to his eligibility for unemployment benefits. We held in Kissinger v. Unemployment Compensation Board of Review . . . 413 A.2d 753 ([Pa. Cmwlth.] 1980), that, where the claimant withheld information which surely would have resulted in a denial of benefits, the Board's finding of 'fault,' rendering claimant liable for overpayments, could not be held to be an error of law. We find this rule dispositive of the fault-overpayment question in this case.Carter, 442 A.2d at 1248.
Also, in Lynn v. Unemployment Compensation Board of Review, 396 A.2d 500 (Pa. Cmwlth. 1979), the Board determined that Thomas H. Lynn (Lynn) had intentionally provided incorrect information regarding his employment as a self-employed salesman and was liable for a fault overpayment of $5,453.00. On appeal to this Court, Lynn argued that he did not give incorrect information to obtain benefits. Lynn, 396 A.2d at 501. This Court affirmed:
With regard to the determination of a 'fault overpayment', we believe that the appellant did improperly mislead the Bureau. He testified that he did not report his sales commissions because he was under the impression that he was allowed to make 40% of his gross income and still be eligible for benefits. The referee presumably found the testimony to be either incredible or unpersuasive. The appellant [Lynn] appears to have been advised throughout the period when he was applying for benefits that he should inform the Bureau of any earnings and he uniformly stated that he was not employed and had not received any earnings. We believe therefore that his acts could be interpreted as being
designed improperly and intentionally to mislead the Bureau, and this establishes as a matter of law a fault overpayment.Lynn, 396 A.2d at 501-502.
Here, Claimant argues that the Board failed to provide any meaningful reference to Claimant's state of mind to establish that he was subject to a fault overpayment. Claimant argues that he consistently testified that he believed that he qualified for a "sideline business" exception under Section 402(h) of the Law, 43 P.S. §802(h). Section 402(h) of the Law, 43 P.S. §802(h), prohibits an employee from receiving compensation for any week he engages in self-employment. Claimant concedes that he did not qualify for an exception to Section 402(h) but erroneously believed that he did when he received benefits. As a result, Claimant argues there is nothing in the record to support the determination that his actions were in any way deliberate, intentional, or knowingly false.
Section 402(h), 43 P.S. §802(h), states, in pertinent part that an employe shall be ineligible for compensation for any week
(h) In which he is engaged in self-employment: Provided, however That an employe who is able and available for full-time work shall be deemed not engaged in self-employment by reason of continued participation without substantial change during a period of unemployment in any activity including farming operations undertaken while customarily employed by an employer in full-time work whether or not such work is in 'employment' as defined in this act and continued subsequent to separation from such work when such activity is not engaged in as a primary source of livelihood.
The Board implicitly did not credit Claimant's testimony. In unemployment compensation proceedings, the Board is the ultimate fact-finding body empowered to resolve conflicts in evidence, to determine the credibility of witnesses, and to determine the weight to be accorded evidence. Unemployment Compensation Board of Review v. Wright, 347 A.2d 328 (Pa. Cmwlth. 1975). The Board through the referee determined that even if one accepted Claimant's assertion that he was "uncertain how to report his earnings from self-employment driving limousines . . . . the claimant had more than opportunity to disclose that work to provide the Service Center an opportunity to adjudicate those services rendered. Instead, the claimant remained silent until the Internal Audits Division received a tip that the claimant was receiving UC benefits while operating a limousine." Decision at 3.
As in Carter, Claimant failed to divulge income that would have disqualified him from receiving benefits. As in Lynn, Claimant did not report income under the allegedly mistaken belief that he was not required to do so. This Court determined in Lynn that the factfinder did not credit Lynn's testimony. A similar situation occurred here. The Board did not believe that Claimant truly thought he did not have to report the income. Clearly, the Board believed he knew he should have reported the income and chose not to report it.
Claimant concedes that the standard for proving a fraud overpayment for ARRA benefits is consistent with that for proving the existence of a fault overpayment under the Law.
Claimant next contends that the Board erred when it failed to accept his letter of appeal as encompassing appeals from both decisions rendered by the referee. Claimant asserts that even though he only referred to No. 11-09-B-4834 in his appeal the fact that he attached a copy of the referee's decision for No. 11-09-B-4836 reflected his intent to appeal both decisions.
No. 11-09-B-4834 was the referee's decision that denied unemployment compensation benefits and found a fault overpayment of regular unemployment compensation benefits in the amount of $10,764 under Section 804(a) of the Law, 43 P.S. §874(a), and a fraud overpayment of federal additional compensation benefits in the amount of $650 under Sections 4005(a), (b), and (c) of the Emergency Unemployment Compensation Act of 2008 (EUC Act), 26 U.S.C. §3304 note in accordance with Section 2002(f) of the ARRA. This Court has disposed of that appeal.
In No. 11-09-B-4836, the referee determined that Claimant received a fraud overpayment of EUC benefits in the amount of $14,076 under Sections 4005(a), (b), and (c) of the EUC Act of 2008 for claim weeks ending July 24, 2010, through March 12, 2011, and $525 in accordance with Section 2002(f) of ARRA.
Claimant stated in his letter of appeal that "I, James Laczo, under advice of legal counsel hereby am appealing the orders of the referee's decision dated August 19, 2011. My appeal number is 11-09-B-4834." Letter from James Laczo, September 8, 2011, at 1. The referee issued two separate decisions or orders on August 19, 2011. Claimant specifically stated that he was appealing the "orders." Claimant used the plural to indicate that he was appealing more than one order. While he only listed the number of one of the decisions, he attached the second decision to the letter of appeal.
Because the Board treated the letter as an appeal of just No. 11-09-B-4834, it did not address No. 11-09-B-4836. In the Board's brief to this Court, the Board stated that "without some statement of intent to appeal the second decision, there was no valid appeal." Board's Brief at 7.
The Board cites no case law, regulation, or statute to support its position. The Department of Labor's regulation, 34 Pa. Code §101.102, provides that the form and filing of an application for appeal from a referee's decision should be "in accordance with §§101.81 and 101.82 (relating to filing of appeal from determination of Department; and time for filing appeal from determination of Department)."
34 Pa.Code §101.81(c) provides:
An appeal form a determination of the Department shall be filed with a Department appeal office, a workforce investment office or a Board office and shall contain the following information:
(1) The name and address of the claimant.
(2) The Social Security number of the claimant, if known.
(3) The date of the determination which is being appealed.
(4) The reasons for appeal.
(5) The name and address of the appellant.
This Court concludes, as obviously did the referee, that Claimant intended to appeal both decisions. As a result, the Board erred when it failed to address the appeal of No. 11-09-B-4836. However, this error was harmless. If the Board had addressed the appeal of No. 11-09-B-4836, Claimant would not have prevailed on his attack against either of the fraud overpayments. The Board's finding of fault stemmed from his failure to disclose his work and income as a limousine driver which was the basis for the overpayments in No. 11-09-B-4834 which this Court affirmed. The same finding of fraud would have resulted in the fraud overpayments at No. 11-09-B-4836.
Accordingly, this Court affirms.
/s/_________
BERNARD L. McGINLEY, Judge ORDER
AND NOW, this 24th day of July, 2012, the order of the Unemployment Compensation Board of Review in the above-captioned matter is affirmed.
/s/_________
BERNARD L. McGINLEY, Judge
There is no requirement that the docket numbers of the appeals be listed on the appeal. Claimant listed his name, address, social security number, and the date of the determinations being appealed.